Bought Cipher Resources

Bought Cipher Resources

In the spirit of using this blog to make my resource stock speculations public, I will announce that from September 4th onwards, I’ve accumulated a position in Cipher Resources (TSXV – CIFR) at an average of $0.09.  It closed lower than that today, but I don’t care – if it continues to be in this price range, I might add to my position.  This is a punt on the people/groups involved.

Cipher was brought to my attention by Jim Mustard at PDAC back in March of 2017.  Jim sits on the board of Cipher and I was fortunate enough to have first met him way back in 2005 (or maybe 2006) at a mining conference in Ulaanbaatar, Mongolia.  Having been to UB before, Jim showed me around town and suffice it to say, I was in good hands.  From UB, we went on to visit two uranium deposits in western Mongolia: Western Prospector’s Gurvanbulag and Khan Resources’ Dornod.  I believe Jim was a mining analyst at Haywood at the time and then went on to be an investment banker at PI Financial.  Anyways, I’m glad he introduced me to the Cipher story because Endeavour Financial is now a major shareholder.

Cipher is looking to become a new streaming company and Endeavour, one of the world’s best mining finance advisory companies, is behind the story.  Beyond Endeavour, Cipher also brought in the Terra Capital Natural Resource Fund managed by Australia’s very well-regarded Terra Capital.  Endeavour has a crazy amount of deal flow and sooner or later I imagine Cipher will announce its first streaming transaction.  At that point, $0.07 will look crazy (so will my $0.09 average price).

Together, Endeavour and Terra own about 30% of the stock.  On a partially-diluted basis (where they exercise their warrants), that joint ownership increases to 47%.  With about $3 million in cash in the bank and a $4.2 million market, I don’t see any downside.  In a worst-case scenario, Cipher never completes a streaming transaction and I own cheap stock in the next Endeavour shell company – not a bad fall-back position.

Philip O'Neill
Philip O'Neill
poneill@mp1capital.com