It's set to be an incredible year in 2014 for many investors in the junior sector. With the sector beginning to improve overall, new discoveries in the uranium sector are gaining investors interests and Bay Street has now come back to the table ready to finance the next hot story. But how should a retail investor best take advantage of some of these opportunities?
We all know the junior market is a very risky game. So how do investors that want exposure to the space minimize their risk? One of the ways is to invest in various deals. Out of the 10 junior listed companies you invest in, many lose market share, a couple may stay even, but you really hope one makes it big; hopefully big enough to pay off all the other losses and then some. That’s the name of the game. However, the amount of capital needed to invest in several companies at the same time can pose a problem.
Second, many retail investors don’t have the necessary expertise to invest in the right company at the right price. That is why investors who are still weary of the volatility of the venture exchange would greatly benefit by investing in a public vehicle that has the right management team to intelligently invest their capital. Zimtu Capital ($ZC:CA) is a publicly listed investment vehicle listed on the TSX Venture Exchange. Led by Dave Hodge, the company specializes in creating value by investing in early stage companies at the private and seed round, thus minimizing their overall risk for their shareholders.
What differentiates Zimtu from many other public investment vehicles is that they not only invest in companies but they also generate their own projects, list them through their own public vehicles, and take a very active role in supporting them; again, minimizing their overall risk. Zimtu is able to invest in companies at such early stages that aren’t marketed to the general public. For example, one of Zimtu’s holdings is a company called Kapuskasing Gold ($KAP:CA). KAP.V is currently trading at around $0.15. Zimtu was able to get into the initial seed round of financing at $0.05…already tripling their investment.
Zimtu has also seen significant improvements in the value of a number of the companies they own major positions. For example, Western Potash Corp. (WPX:CA), a well-funded potash development company with a full feasibility study completed on their Milestone Project in Saskatchewan, Canada.
Take a look at their chart below:
The stock is currently trading at $0.66 (as of close on March 27, 2014) and Zimtu owns over 2.7 million shares and 2.7 million warrants in the company. This represents over a $2.18 million position.
Next, after taking a more active role with Lakeland Resources ($LK:CA), the company has made a major turn-around.
Lakeland, who has been a big winner for many Alphastox subscribers, is a company that was first generated and is still managed out of the Zimtu office.
Zimtu owns over of 4.9 million shares and 2.78 million warrants of the company. At its high of $0.295 a few months ago, Zimtu’s 4.9 million shares was worth a whopping $1.45 million. Lakeland has also just graduated to become a Bay Street-funded deal and is continuing to gain more interest. The company just completed a $2.83 million financing last week, which was oversubscribed.
Commerce Resources ($CCE:CA), another of Zimtu’s holdings has been a recent success for the group. The share price went from a low of $0.055 to a high of $0.26 in just over a month. Zimtu owns over 3.7 million shares in the company amounting to over a $900,000 position at its peak.
Commerce also just completed a $2.54 million financing with Secutor Capital Management, increasing their shareholder base with Bay Street funds and providing them the necessary capital to advance their rare earth element and rare metals projects.
With such a significant turnaround in the company’s underlying assets, I feel this is the time to take advantage of a company like Zimtu. One of the most important qualities in this business is the ability to raise capital. Zimtu has proven that they can take early stage companies and help guide them to the next level with the focus of increasing value for their shareholders along the way.
One of the most compelling aspects of Zimtu is its share structure. The majority of companies have not been able to emerge from the adverse market conditions of the past few years unscathed. The company only has 11.2 million shares outstanding, has a market cap of around $5.5 million with assets totaling over $8.0 million.
Like I mentioned above, investors should look at a company like Zimtu as a potential investment to diversify their risk. Instead of investing in one and hoping it works out, investors in Zimtu gain exposure to a number of significant opportunities.
I highly encourage everyone to keep Zimtu Capital ($ZC:CA) on watch now.
Another interesting company to keep on the radar screen is Blackhawk Resource Corp ($BLR:CA). Blackhawk used to be a junior energy company but has just gotten conditional approval from the TSX Venture Exchange to switch its focus and become a public investment fund. The company will begin evaluating investment opportunities in all sectors with its primary focus being to seek returns through investments in the securities of other companies and other assets.
Blackhawk is currently sitting at a $2.2 million market cap, with over $3 million in cash and generates over $250,000 per quarter (from their previous investments in producing oil wells). Blackhawk is run by Dave Antony, a seasoned veteran in the industry that has been extremely successful starting, building and creating tremendous value for his shareholders.
Mr. Antony is currently the Chairman of Southern Pacific Resource Corp ($STP:CA) a TSX-listed energy company that at one point was worth over half a billion dollars. The company is currently sitting at a $130 million market cap and just raised $150 million through a loan facility with Credit Suisse.
One of the things I like about Blackhawk is that they are very cash rich and management isn’t restrained at single sector investments but will build a diversified portfolio of investments in ALL sectors, thus further de-risking the value proposition for its investors. Blackhawk will begin evaluating investment opportunities in all sectors with its primary focus being to seek returns through investments in the securities of other companies and other assets through both debt and equity. You can be sure Mr. Antony and his team are one of the best groups to drive real value for their shareholders, so stay tuned for further news and updates.
As always, if you have any questions, please do not hesitate to get in contact with me anytime. I look forward to hearing from you.
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