This is one of two stocks that I’d been bagholding (the other being ECR.V). I’ve had an open sell order at .06c for a while that finally filled. I bought at .15c and later sold for a 60% loss. Nevertheless, I’m glad to have it out of my portfolio.
Reasons for Buying
- The involvement of Michael Gentile, someone I still think is bright. He’s on the board and described the stock as a way to play the hot (at the time) Red Lake area (this was shortly after GBR was sold). Gentile himself is transparent though and admits that he expects many of the stocks he buys to go to zero.
- Chris Taylor, of GBR fame, is a director.
- Large royalty/property portfolio (86 projects, 40+ that were optioned and cash-flowing (allegedly)) that can generate cash to offset G&A. To me this was the main differentiator between Solstice and the average explorer that needs to dilute for to raise money
- Insider Ownership of 35%
Reasons for Selling
- Company has little cash. Recently exploration was partially funded by Ontario government grant. Otherwise, I’d bet that they have less than $200k in the bank, though the options payments from the property portfolio provide some income.
- High share count (200M)
- Share price is too low to effectively issue equity to raise capital, and share count is already too high.
- Track record: The company’s new CEO, Pablo MacDonald, is nice and open to talking with shareholders, but he’s this is the first company he has run.
Mistakes Made
- For a microcap stock like this, there’s no excuse for not calling the CEO before buying. If I had, I would have realized that the royalty/property portfolio was a peripheral part of the company. It is not a royalty company–it was a gold-focused exploration company (this focus later pivoted to lithium after the Red Lake drilling generated lacklustre results). The property portfolio does generate some income but not enough to fund full drill/geophysics programs.
- When the CEO quits the company (Mike Timmins) after the drilling season, I should have taken this as a hint that drilling went poorly and sold pre-results.
- Not selling early enough. I had a note to sell post-Red-Lake-drill results in Spring, 2023, but I did not.
Things Done Right
- Building a relationship with the CEO so I could get a projection of the newsflow to come out in the near-term
- Selling stock (this is an assumption)
Lessons Learnt
- Pre-discovery exploration stocks are gambling, and taking a punt on them is foolish. There are companies out there with established assets (or better yet, revenues) that can provide a lot of upside, even multibaggers. Throwing money at exploration companies based on the hope of discovery is reckless.
In hindsight, there were some good reasons to take a punt on SGC, but ultimately, I don’t want to be punting. The SGC.V story may require more patience. Like most mining stocks, it may turn at some point assuming they can confirm the pegmatites on their SLP or Quetico properties are spodumene bearing. They are still doing surface-level sampling and no drill programs are planned, so this will take at least a year to find out. In the meantime, I’d rather put the cash into less speculative plays.
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