I first started writing about Nemaska last year over on Seeking Alpha where I post under the same user name that I employ here, Joe Retail. That was back when NMX was trading for about 15 cents on Canada's Venture exchange.
I rode it for more than a 600% gain, but ultimately left a lot of upside on the table, exiting well before it hit its all time high up near $2 CDN. That's okay, even when I wrote about getting off the Nemaska train I acknowledged that I was likely leaving too soon, that there was in all likelihood more upside. I shared that with another SA blog post on April 21st, which was just before I started publishing my own blog here at Avoid The Bag.
I admitted liking Nemaska even when I was selling, and in fact I still do....from a fundamental perspective. I know, I can just hear both of my regular readers saying:
''FUNDAMENTALS'!?!?!
''You're always writing that the fundamentals are already priced in, that's its old information that barely registers when you're making trading/investing decisions''.
And that is true, and ultimately its why I sold. The lane that Nemaska was riding in on the investment freeway started going too fast for my liking, things were so good that everyone was moving in and I figured it was due for a correction....my timing could have been a lot better, but as I write so often, better to get out too soon than too late.
What do I like about Nemaska? I have a patriotic streak to me, and I lived four years in la belle province de Québec, et franchement, Québec me manque. Oooops, sorry.....latent French slipping out from my time living in French Canada. I share the opinion that lithium is going to be hugely important, and a mine not only in Canada but also in my favorite province of Quebec, that's beyond awesome.
But as I've also written a few times before, a lesson from my late great father was not to fall in love with a speculative stock. And with Nemaska not projecting an operating mine until 2018, there's still a lot of speculation left with Nemaska. Everything so far has gone smoothly, but they're not yet in production. As they get closer to to an actual working mine, a few snags and road blocks are probably to be expected.
Another concern is dilution. Back in 2015 when I first bought in the number of issued and outstanding shares was around 190 million. As of May 31st of this year that number had increased significantly, by about 45 million. That's an increase of almost 25% to over 235 million.
Also there's a chart you can find on line, several actually, which show the life cycle of a mine from start up to production. The chart shows a rise, a fall and then another rise, with a trough in between. If Nemaska follows the pattern it should start on an marked uptrend sometime prior to full production in another two years or so.
I don't think this chart pattern is one size fits all, but as a general guide I believe it can be useful. I would share it with you but I don't want to infringe on any copy written material. You can google image search it and look at a few examples if you wish.
Nemaska, thanks to promotional efforts with Ellis Martin, The Midas Report, the Vegas Lithium investor show, and probably one or two others that I'm missing, it has had one helluva run. And even though I am out right now I still check it from time to time. The trough that the life cycle chart shows is the period when the hard work of building the mine is carried out, before it goes into actual production.
We shall see how it plays out over the next couple of years. In the meantime I'll keep looking for slow moving lanes on the investment speedway that look like they may start moving in the future.
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