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What to expect (Apr. 15)

• 🏠 A look at how exploration ‘darlings’ rise to the top

• ✅ Monster Pick - This company is worth 10x it’s stock price

If you've been invested in the mining/exploration game long enough, you'll start to notice patterns.

One of these patterns happens more consistently than others.

Every year, a few exploration companies seem to gain the following of everyone in the industry. You'll hear about them at conferences, other companies compare themselves in presentations and investors can't get enough.

Becoming a 'darling' of the exploration game often also comes with a nice increase in stock price.

But how do companies do it?

Do they better results than everyone? A stronger management team? Or are they possibly backed by exceptional funds or 'smart money'?

If there’s one thing I've learned in my short time in this world is that success is rarely ever because of one thing - a perfect storm of everything coming together is more likely.

But that doesn't mean it's completely random either.

There's a few very specific reasons why these companies get that status and the synergistic effect of them coming together is what drives this success.

As we've seen before, if it turns out you're missing some of these key pieces then watch out - the fall from the top is long and painful.

Previous/Current darlings

Hercules Silver (TSX.V: BIG) is the current celebrity of the TSX venture & CSE. If you're not sure why, check out the post we did about them last December here: https://stock-monster.com/p/mondays-monster-stock-dec-11

Patriot Battery Metals (TSX: PMET) - The craze in the lithium exploration world (although dying) was highlighted by Patriot Battery Metals, driving the stock from under $0.5 to over $17. Following the Corvette discovery, tons of companies rushed into the James Bay Lithium district and ushered in the equivalent of a modern day 'gold rush'.

Ask anyone in the industry, they know Patriot.

Emerita (TSX.V:EMO) - an earlier example of an industry darling comes from Emerita Resources. In 2021, the company rose from under $0.2 to over $4 on news that it would win an upcoming court case for a valuable spanish asset. Emerita's rise initially began when an anonymous investor going by Doc Jones wrote his case for why to invest in the company.

While the company still has a loyal following, the stock price has severely dropped (down to $0.28) since, largely in part because the court case decision will likely be pushed a few years.

These are all examples of companies that have done or are utilizing strategies to get their stock in the hands of investors, and on top gainer lists - but can anyone do this?

Probably.

Let's take a look at the strategies utilized by these industry darlings and how you can notice the up and comers before it's too late.

Big investor early

Whether it's Shaq for Icy Hot or Michael Buble for Bubly, companies that use this tactic are taking a calculated bet that their audience will resonate with seeing someone they know and love using a product, thus convincing them to buy it.

The same goes for junior mining and exploration.

Of course getting a celebrity like Brad Pitt to endorse your mining company isn't the smartest move (or could that work...?), but a well-known investor acts in the same way.

Someone like Eric Sprott - the wealthy mining investor known to take large bests in early stage companies - can help give retail investors the confidence to jump in the stock.

Investors aren't confident, they need a reason to be.

Results matter

This one is pretty obvious, but size (and grade) matters.

Investors want to know the company has the goods, and if they don't - there's no chance.

Take Neotech Metals (CSE:NTMC) for instance.

That stock ran to over $4 in less than 2 months on 0 results. They spent a shitload on marketing and basically told investors that their project was the same as defense metals (TSX.v: DEFN).

It resulted in a big increase in share price - but the exchanges didn't like it and made them change almost all their materials to accurately reflect the project.

Active Strategy

It's important that management has a plan for the company. A direction.

Too many times I see companies with 5+ projects and news releases are hard to follow as they jump from asset to asset with very little direction.

Investors, and people in general, want a story to follow. Exploration is quite literally a treasure hunt, take them with you.

A good strategy for companies is to write a checklist or timeline for their strategy, outlining the expected milestones.

Check for this, are they checking the boxes they said they would - good, keep going.

Marketing

Marketing your company is important. Investors need a way to access information in an easy to understand format, with their needs taken into account.

Do investors want to read technical news releases every day and sift through research reports to find the info? Some do, but most don't.

In 2024, companies need to using short form content, they need cohesive branding that relates to their vision and they need to make it clear the goals of the company.

Making sure they website is easy to navigate and information is clear is a must.

Video content is increasingly becoming more important. Nobody wants to read anymore, but we'll happily watch it on video. Regular video interviews allow for more in-depth explanations and it personalizes the executives (if they have a personality).

Building trust is invaluable.

The biggest thing to avoid here is over marketing. You can't build a company on that and the ones who try ($NTMC) often sour the deal for investors when the stock inevitably plummets.

Takeaways for investors

As an investor, look out for these types strategies. Is the team transparent and are they updating investors regularly with good results? Do they have result and strong management?

None of this guarantees success - but it makes it a heck of a lot easier.

Look out for these darlings, there's more than you think.

👋 Colton, Stock Monster.

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This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research before making any investment decisions. All content is based on public knowledge. We have not been compensated in any way for this pick or content; we genuinely just like it. Assume that contributors to articles own or have interest in stocks they talk about, therefore may be biased, but not compensated to promote them.