Selling Boab Metals
Throughout this week I have sold my stake at Boab Metals (ASX: BML) (OTCMKTS: BMLQF) for a 456% gain. I bought the shares at A$0.08. I first put out a note on Boab on the 20th of August 2024, since then the stock has increased 345%.
It was a tough decision as I put many hundreds of hours on my last report, and I still argue that Boab is very well positioned. However, I would like to buy a house.
My rationale for selling Boab instead of my other stocks (Manolete Partners, Okeanis, Bravo Mining, Liberty Gold and Generation Mining) was the following:
1. Silver has been the best performing metal so far in 2025 and Boab has performed a lot better than the physical metal. Therefore, it has done a great job.
2. As Rick Rule said: “I have learned after 50 years in this this [mining] business, that you have not made the money until you have taken it”. And I think a 400%+ return is a great spot to walk away from.
3. Bravo Mining, Liberty Gold and Generation Mining are all trading at larger discounts to NPV (10% discount and at current metal prices) than Boab Metals is. Therefore, the three of them are more attractive than Boab is in terms of NPV.
4. I am mostly attracted to hated metals and commodities in general. And silver is no longer hated. I think PGMs are more of my cup of tea right now, although I am also eyeing coal stocks.
5. Okeanis has done a great job, and the tanker rates seem to be very healthy right now. I argue they have a long way to go.
6. Manolete Partners has done a terrible job up until now. However, I would like to give the new CEO a chance to see what kind of job she does.
As a result of this, my most logical course of action was to sell Boab.
All this said, with the leftovers from buying the house, I will probably buy back into silver.
However, one of my subscribers made an interesting point: Perhaps I should investigate silver stocks that have not yet published an economic study. I will look into that to see if I find anything better than Boab.
Boab is really on the sweet spot where the mine is financed, and it’s positioned in an industry already in a bull market.
The capital raise announced today has surprised me in a negative way. Boab was already well financed, in fact with the debt plus the last equity raise, there is more than plenty of capital to build the mine plus a buffer.
Furthermore, the company just announced a “Minimum A$20M reduction in the Processing Plant Capital Cost”. That capex reduction is at the lower end of what I expected, but it’s still around a 10% reduction on the overall capex. Therefore, it’s very significant.
I would like to see what Simon (the managing director) plans to do with that money before I jump back in Boab again.
Something similar happened with Vizsla Silver recently when they announced a “US$300 Million Convertible Senior Notes Offering”. Vizsla did not need the money as they were already well capitalized.
I am not sure if these kinds of moves signal caution on behalf of the management teams, or if they plan something we don’t know about. We shall have to wait and see. However, I think both are signs that we are truly in a bull market for silver.
Any feedback is more than welcome in the comments, or you can send me a message on Substack, or through my Twitter (X) account @AAGresearch.
As always, I want to thank my wife Yeimy, who has helped me a lot while I was writing this by myself. This report and this blog would not be possible without her. Thank you.
I hope this finds you well,
Alberto Álvarez González.
Disclaimer: I assume no liability for any and all of your actions, whether derived out of or in connection with this information or elsewhere, and you hereby warrant and represent that any and all actions that you take or that you may take at a later date in connection with this information shall remain your sole responsibility and, in case, I shall not be held liable for any such actions.
Link to report: https://open.substack.com/pub/albertoag/p/selling-boab-metals-for-a-400-gain?r=3hhq06&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
