Includes shares in Fibria Celulose SA, Victoria Gold Corp., Trevali Mining Corp. and Ivanhoe Mines Ltd.
Peter Arendas is a professor with a specialization in financial and commodity markets.
How he invests
Mr. Arendas is putting his expertise in financial and commodity markets to work in the stock market by investing in mostly small- and mid-cap companies that have an "interesting mining project" under development or study.
By "interesting," he means the ore deposit is high grade or the mining costs are considerably below the industry average.
He buys when such opportunities are undervalued. This requires conservatively estimating future cash flows and earnings per share of the company's new and existing mines.
These estimates are then multiplied by price-earnings and price-cash-flow ratios to derive valuation.
Located in Brazil, Fibria Celulose is the largest hardwood pulp producer in the world, and one of the lowest cost producers.
It has just completed a project that should add to the bottom line for some time, Mr. Arendas notes.
Victoria Gold has the Eagle Gold project in central Yukon. He bought shares in 2011, and added more during a subsequent price reversal to bring his average cost down.
As a result, he is now sitting on gains. Gold production at the new mine is expected to start by summer of 2019.
Anticipation of a bull market in zinc in early 2015 led him to buy shares in Trevali Mining, "the purest, publicly traded zinc producer." After a gut-wrenching price collapse in Trevali's stock, the zinc bull market finally arrived in late 2016, boosting his position deep into the green.
Ivanhoe Mines, which is led by industry legend Robert Friedland, "is developing not one, but three world-class projects."
The Platreef project in South Africa should be one of the biggest platinum mines and the Kamoa-Kakula project in the Democratic Republic of Congo has one of the biggest high-grade copper deposits in the world.
He bought OAO Severstal, a Russian steel producer, and Dendreon Corp., a U.S. biotech company in 2009, at the bottom of the bear market.
The return on each was several hundred per cent.
In 2011, Baja Mining Corp. (now Camrova Resources Inc.) had a copper mine under development that looked great – until a huge cost overrun occurred and the company's ownership stake was slashed.
"Diversify. Also, if you really like the prospects of a company even after its share price has collapsed, don't be afraid to average down," Mr. Arendas recommends.
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