We updated our sum of the parts client summary report and valuation. Is $WRLG still a buy? Become a paid subscriber and download the full report:

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Summary

ISO is at least 5 years away from meaningful production as a mid major. With that in mind we have to consider future issuance of shares and debt and the general timing of a market rebound.

On the other hand at current prices represents deep value in terms of EV/lb.

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Summary

has retraced 50% off its high, while Uranium spot price is only down about 10% (term isn’t down at all). This seems like a buy now that we have re-obtained the 3 year MA. But exactly how much value is in the company? Paid subscribers can download the report!

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Summary

Encore has been beaten up lately due to management disruption and failure to meet production expectations.

Company specific, we should be looking for announcement and commitment of long term leadership. Improvement in cost and production of the Texas assets and further regulatory approval of assets in SD. Become a paid subscriber to read our client full reports.

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Summary

The short answer is: not yet. Yesterday $DYL announced they are delaying the FID (final investment decision). This is good move for shareholders, since it reduces the inevitability of future large cap raise. It does discount our published price by $.05.

Become a paid subscriber to access the entire report. There are many more of these on the way, including the agent code to update as new information occurs.

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Methodology guide is here:

Summary

Paladin is a company that is producing uranium at a brownfield site in Africa. Their richest asset (PLS) is development only. It has exploration potential along with their Australian properties. This report does not consider the vanadium business or the exploration upside of the portfolio. You get those for free! DYODD!

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Methodology guide is here:

Summary

The company is currently fairly priced for its in operation assets. That is to say, exploration and expansion is free at current market prices. This is a buyers appraisal and presented for educational purposes only. Do you on DD!

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If you have not already added Don’s book, How to Invest In Gold and Silver – D. Durrett, to your library, what are you waiting for. We borrow the framework outlined in chapter 10, but with some important adjustments.

Before we dive in, visit this report we produced this week from NXE by clicking the image/button below. It will give you some hard examples of what we are going to explain below.

SEE THE REVIEW OF NXE

Executive Summary

What do we mean by Sum-Of-The-Parts? Simple. This is sum of all present value of assets independently minus the sum of all present value of liabilities. The present value of something is merely a time + probability discount to present day. Mine is a sure thing, starts in four years… NPV = 100% times (1/1.05)^4 times whatever that mine is worth at open.

This valuation model is simple liner probability. That is to say, we discount value for every contingency. If you don’t hold it, you don’t own it. In the case of uranium, you can hold it, but not for very long. Apparently, that is the correct view of the stocks as well.

Mining or drilling is a simple matter of unlocking resource into a usable, recognizable, standardized state of value (generally as a producer good into something else). Refined gasoline, pure silver bars…etc. The value of a uranium energy product U3O8 is the future sale price, discounted by milling, transportation, ISR or digging, leasing, finding, financing, marketing and various other capitalized expenditures. That’s a lot of middle-men to pay and the word we pay them with in present value terms is… discounting. Modeling so many parts demands knowledge beyond this author’s ability from project to project. Therefore, we adopt simplifying assumptions. There are things we don’t know that we can make a guess, and there are some things we just don’t know we don’t know. Be conservative in assumption setting. The simpler the assumptions the easier the result is to defend!

Simple Formula:

Where:

• sᵢ = development-stage valuation factor for project i.

• Lᵢ = attributable plausible pounds of U₃O₈.

• Nᵢ = modeled mine life in years.

• P = flat uranium-price scenario: $85, $100, or $150 per pound.

• AISCᵢ = all-in sustaining cost per pound.

• Dᵢ = years from the valuation date until the start of the first production year.

• y = production year, from 1 through Nᵢ.

• Dᵢ + y − 0.5 = mid-year cash-flow timing, expressed in years from the valuation date.

• 1.30 = cost multiplier incorporating the 30% cost pad.

• 1.05 = one plus the assumed 5% annual discount rate.

…lets walk through it.

Step 1: Determine Plausible Pounds

There are two possible branches here. Case 1: the project has a defined P&P reserve. Case 2: (many Insitu projects) the project has no defined P&P because the company did not feel in necessary to categorize as reserves. This means the implied (hidden) P&P is captured inside the M&I.

Plausible Pounds With Proven & Probable Reserves

Don creates a simple framework for discounting Measured, Indicated and Inferred. The coefficients of each (probabilities) are the discretion of the user. This user has chosen very conservative figures in {.9,.65 and .3}. This is due to the fact that the uranium market isn’t so often categorized as Proven and Probable yet. Rule of thumb is not to pay for what you don’t know. And we don’t know what % of the lower tier of minerals will materialize above ground.

These assumptions can be easily adjusted on project by project basis with more informed information and likelihood.

Example (NXE):

All figures are in millions of pounds of U₃O₈. At 100% ownership, NexGen’s attributable plausible pounds in this example equal approximately 251.0 million pounds.

Plausible Pounds W/o P&P Reserves

Here the formula drops the P&P variable and uses the 83% recoverable assumption for all M&I.

Example (UEC):

Step 2: Flat Price Scenarios, Padded Costs

Financiers account for the cost of a single pound of uranium from the ground as All In Sustaining Cost. This number is hardly that. It doesn’t account for tax or certain overhead costs. We adjust the known AISC by a factor of 1.3 to reduce some margin to pay these other bills. One thing is 100%, the powers of jurisdiction will want theirs once money is made.

Step 3: Project Stage Factors

The lifecycle image of natural resources and mining looks like this when compared to time. This image has 5 stages, our model has more. As we move from left to right, we move from uncertainty towards more certainty and eventual maturity.

We use the following factors to represent the likelihood of success in each of the pre-production states. These are conservative. In the analysis of each individual company there is an estimate of future capex fund raising as a liability. In some since this is a degree of double counting. These factors can represent uncertainty of both financing and the project scale.

We are buyers, we don’t want to pay too much uncertainty if we don’t have to. 30% discounts to present NPV should be considered very attractive.

Step 4: Discount at 5%, mid-year

We use a discount factor of 5% to account for time. This is currently essentially the risk free rate. Other contingencies loaded in elsewhere, this is a standard approach for high quality jurisdictions.

Step 5: Bridge to equity value per share

Equity value = Σ project NAVs − remaining initial capex − debt and other obligations + cash + other investments and assets

Divide by fully diluted shares. Check cash, listed securities, uranium inventory, property, leases, product loans and reclamation obligations. Sustaining capex already inside AISC is not deducted twice. Convertibles are either converted (shares in, debt out) or treated as debt, never both.

Step 6: Check Life of Mine & Verify Resource Estimates

The definitive resource estimates are in the NI 43-101 technical report filed on SEDAR+. They are no or less accurate than any other estimate, but they are created AND SIGNED OFF by independent, professional geologists.

Alongside this data is the expected life of production from the mine. This is another estimate as is production rate. We aren’t picking up any expansion in this calculation so face value of the mine life should suffice for a conservative projection.

The Ten-Factor Scorecard From Don Durrett

Each factor is scored 1–10 and the total is the simple average:

1. Properties and ownership

2. People and management

3. Share structure

4. Location

5. Projected growth

6. Good buzz and chart

7. Cost and financing

8. Cash and debt

9. Low valuation estimate

10. Upside potential

Any factor below 6 is flagged as a concern. We also separate asset quality from jurisdiction. A Tier 1 country doesn’t make a Tier 3 deposit a good mine, and the reverse is also true.

The purpose of this examination isn’t to rate how good we are and by the highest score card. The purpose is to interrogate the weakest links of companies and projects with otherwise attractive investment pricing. Any investment relations publication will be happy to tell you what can go right on the front page of their website. Finding what can go wrong is the assignment of every investor, and that requires digging and interrogating the thesis. That is the purpose of this step.

What the Model Leaves Out

• Optionality valued at zero. Unsupported exploration upside is excluded from the base case. That doesn’t make it worthless, but it can understate value.

• Conservative and aggressive features. Resource haircuts, stage haircuts and the cost pad are conservative. A flat $150 price, a 5% discount rate and a simplified production profile can inflate value. We don’t call the whole model conservative.

Bottom Line

The method is a disciplined way to ask what the assets could be worth under stated assumptions. It does not predict where the shares will trade. All values are hypothetical, resources are not reserves, and mining equities can lose all principal.

Complete Report on

https://fifthgenerationadvisers.com/research/FGA_NXE_10092026.pdf

If you enjoy content like this, consider becoming a paid subscriber at the current rate. I will be releasing many more of these in the Uranium space and other sectors to paid subscribers!

Download link is provided below for paid subscribers. Enjoy!

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This agent is very simple and shouldn’t use up too many tokens. Either way, LLMs are fantastic research tools for very specific price action patterns, education and training. Give it a shot!

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This post intends to review all of the open commodity accelerator positions with full management commentary. But, before we do, it’s worth reflecting on realized capital gains over the last 18 months. Many of the current positions are in the red are simply the unrealized losses of a much larger realized gain. We took profits, sometimes early, to ensure capital would be available to take advantage of lower prices. This is the proper framework for today’s analysis.

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• Money

• Momentum

• Sentiment

Today we focus on sentiment, but for wider view, we cover how to build a fantastic chart setup to capture a wide view of these in this article:

What is sentiment?

To be perfectly honest, sentiment is a purely subjective concept in markets. Fear, greed… those are the emotions described, but for smart money the better terms would be concern and opportunity in forward expectations.

One way we can measure this is the way institutions are buying and selling their short-term hedges.

The VIX

As a subscriber of this substack, you have no doubt heard of the S&P VIX (fear and greed index). Ever wonder what exactly is the ^VIX? Technically it is the implied 30 day forward implied volatility for SPX Index Options. What is implied volatility? In the most practical terms… a measure of the market demand premium for puts and calls.

An increase in VIX means an increase in downside protection because of “constant institutional exposure to the market”.

One of the key institutional requirements is participation (in markets). Retailers and investors expect to be fully deployed all the time. Because of the size of these positions, there simply aren’,t enough buyers (liquidity). It’s not major institutions can simply get on the “tele” and ask retailers to buy all the stocks they don’t want to continue holding /s. For the most part large positions must be hedged, not liquidated. That means spike in demand for puts when risk of market price decline is elevated. Because of full time participation AND that the vast majority of all positions are long (not short), VIX moving up almost always indicates concern of SPX drop. Put demand dominates call demand for index positions.

That doesn’t mean this assumption holds for other volatility indexes!

Fortunately there is a fairly simple way to tell whether the high or low volatility is attributable to demand for puts vs calls… the put/call ratio. (Weighted Implied Vol Premium of Puts / WIV Premium of Calls). A PC ratio > 1 suggests the put market dominates calls and vice versa. It is at the extremes of >2 and <.5 that are worth taking note of.

As of this writing, the market has printed several sharp down days, so as we would expect, the PC ratio is quite elevated well above 1 for most time frames.

Silver VIX

The following chart is $VXSLV, available on tradingview. Note that 2 year moving average has acted as support in bull and bear markets of recent history. Now that we have hit the 2 year MA, the volatility is looking to break up from its bull flag (not confirmed).

Does a projected increase in implied volatility suggest increase demand for Calls, Puts or both?

https://www.barchart.com/etfs-funds/quotes/SLV/put-call-ratios

The answer is simple… calls. In contrast to S&P, silver’s option demand is heavily dominated by calls. Just as we would conclude ^VIX breakout is potentially bearish for the S&P, we can conclude VXSLV breakout to be explosively bullish for $SLV (Silver proxy).

As of this writing, today’s drop in silver was near 7%! Yet, all but extreme short term P/C ratios were well under 1. Pay close attention to the high open interest blocks (green). The implied vol to the upside is nearly twice that of that to the downside! Market participants are (willingly) spending a fortune to get a piece of the next breakout!

Add VXSLV to you charts and pay close attention. It may help forecast the next breakout move!

Note: we don’t have enough historic data to accompany the previous bull markets of 2000s and 1970s to verify this predictive confluence.

Producer Price Index

After huge run in gold, silver and most recently oil, we are nowhere near the peak… unfortunately. PPI historic chart tells the story of the modern US economic era. We have successfully put in a higher low from March 2024.

Treasury Rates

Over about 100 years, you can see just how significant this new era of treasury rates are. This is the reason bombs get dropped. Significant hegemonic aspects are at play if the chart plays out the way fractal analysis suggests. Keep in mind, these are yields, so chart is linear, not log. 10 Year MA seems to be the definition of historic economic regimes.

Gasoline

For the moment there is resistance at $3.60. But $7/ga is implied here. Yikes!

Gold

Copper

$8.50 is measured move, long term.

Platinum & Palladium

We posted:

Turns out, the volume suspicion was correct…

Commodities General

Thomson Reuters CRB, notes from article.

When you don’t know where you are… emotions take over.

Here is a wire-frame of what we’re developing for position sizing and money management.

In this display, DCA (Dollar Cost Average) in and out of an open trade improves cost basis and amount at “open” risk. Right now we’ve configured an example trade to max 25k on open cost basis. We have other many other configured strategies for my RIA, clients and long term etcs.

Do we trim at key resistance? What is the current cost basis relative to budget? The “trade” is defined by weekly chart, the “positions” are daily or sometimes lower. This isn’t our reporting layer, its just trade logging from execution. The tool is meant to answer the question “should I add more here?” “should I take off?” etc. We we’re satisfied with the pre-existing software on the market (though there are many options that are very affordable).

so… RIP software... build it. We will publish the initial version here substack when testing is completed. Make sure you subscribe to get notified!

Minimum requirements:

• Excel 365 license (updated) - local install

• Wisesheets Addin Strongly Recommended (Affiliate Link)

What other kind of features are you looking for? Leave a comment and share!