$50k Challenge Annual Review

The $50k Challenge was launched just over a year ago. For those who aren’t aware what this experiment consists of ill give a brief explanation.

Anyone in the micro-cap space would know that we are looked down upon in the investment community.

So I thought I would create a small public portfolio where I could prove that micro-cap investors can consistently make money. I’m not trying to find 1 stock that’s going to go from 10k to a million, rather I want to show consistency.  Look I won’t complain if I land a 100 bagger but it’s not the aim of the experiment.

So after running this experiment for a year now I’m really pleased with the progress. A lot of people think there is some kind of secret to consistently making money in the stock market, but there really isn’t. The strategies I use to find and buy the stocks in this portfolio are explored in my Penny Stock investing course. Click here to learn more.

Let’s get into the current portfolio value and performance now:

Starting Capital: $50,000

Current portfolio value: $74,587.30

Profit $: 24,587.30

Profit %: 49

Over the coming weeks I will give an update of each of the stocks that are in the portfolio as quite a bit has happened since I purchased them. Every week I will release an update on 1 stock starting with IXR this week.

Company Name: IXR (Formerly OVL)

Purchase Price: 0.005

Current Price: 0.008

Summary:

JORC Resource: IXR has been a great performer since I purchased it. The directors have executed exactly per the plan to date. As they committed to 12 months ago, IXR has defined a JORC resource that currently sits at 78.6mt with a 630 ppm. Within this overall JORC 9.5mt sits in the indicated category. This JORC resource is only based on 20% of the drilling campaign being completed so it’s fair to say that future resource upgrades are in the works. The remaining 3,700m drilling program will commence in mid-July.

Competitor Analysis: Now to give a comparison to help estimate the future share price appreciation potential of IXR I am using the recent takeover of the BioLantanidos lease in Chile. This lease has a JORC resource of 23m tonnes with a 580 ppm.

Now with IXR having an exploration target of 270 – 530 million tonnes grading 0.04 – 0.1% (400 – 1,000 ppm) TREO, we can see the huge potential it has.  Obviously as IXR is in early stages of drilling, most of their resource is currently at inferred category and needs to be upgraded to Indicated then measured. This is the purpose of the next round of drilling which commences shortly.

If we look at the Market cap of both companies we can try and estimate how much the share price can run IF the positive drilling results continue.

the BioLantanidos lease was taken over for roughly $90m AUD.

IXR Current market capitalisation at 0.9c is $24.5m for 50% ownership of the lease hence valuing the lease at $49m. That gives a comparative price target of 1.7c simply if the same JORC is achieved. IXR however has a potentially 20 times larger resource at double the grade. This is obviously still high risk but if the new JORC is positive then the near future for IXR looks positive.

Cash Position: The directors have implemented a fantastic strategy of only raising what’s required for their immediate needs to reduce dilution. The recent raise of $3m should be the last raise required for IXR to make in my opinion. With $2.5m hopefully to be raised with the conversion of the 0.75c options, IXR cash position sits at roughly $6m. This is more than enough to define a final JORC and access the clauses to reach 50% ownership of the lease.

Risks: The risks for IXR haven’t really changed since I purchased the stock. With all mining explorers the obvious risks apply such as negative drill results.

To find out more about how I analyse stocks that fit the criteria of the $50k Challenge  check out my Penny Stock Investing course.

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