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Tuesday, October 6, 2026

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Not So Fast

Entravision, the portfolio’s largest position, fell more than 40% from its highs as Q3 returns dropped to 37.8% YTD.

EVC $634M
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From X

@StableBread

Fajasy on X

The restart study due in the first half of October at Levack, the flagship mine of Magna Mining $MGMNF (TSX: $NICU), leaves out a zone where a hole reported in June cut 29.7% copper equivalent over 3.4 meters. Magna found the zone itself. In July 2025, a hole drilled into the footwall below Levack’s No. 3 orebody hit nickel-rich veins. Magna calls the area R2, short for “Rob’s 2,” and says R2 resembles the top of the Morrison deposit, where the nickel-rich veins of Rob’s Zone gave way to copper- and precious metal-rich veins at depth. As of June, R2 spanned ~300 meters vertically and ~150 meters north-south, and all 14 holes Magna had reported hit metal-bearing rock. The June hole’s 3.4 meters included 57.0% copper equivalent (CuEq, which converts every metal into copper at set prices) and 44.3 grams per tonne (g/t) of gold over 1.5 meters. In September, another hole extended R2 ~30 meters toward the No. 3 orebody. The veins are narrow. Magna reports lengths along each drill hole and estimates the veins’ true widths at 30-80% of those lengths, so the June hole’s 3.4 meters could be a vein 1.0-2.7 meters wide (30% × 3.4 and 80% × 3.4). In August, Magna finished a 2950 Level drift (a horizontal tunnel) that stops ~300 meters short of R2. CEO Jason Jessup said on September 24 that Magna plans to extend the drift to R2 “sometime in Q4.” From there, Jessup says Magna could start mining along the veins “as early as Q1 of 2027” and ship the ore to Vale $VALE, ahead of a resource estimate “potentially by the end of 2027.” Jessup says R2 can’t go into the restart study, a preliminary economic assessment (PEA), because it isn’t in a resource estimate yet. Once it’s added, he expects R2 ore to “displace some material in the PEA,” meaning replace some of the plan’s lower-grade tons, since it’s “much much higher margin.” Even after mining 1-2 tons of waste rock with every ton of vein (100-200% dilution), Jessup expects R2 ore to grade “10 to 15% copper equivalent,” 3-4.5x the 3.3-3.4% at McCreedy West, Magna’s producing mine (10% / 3.4% and 15% / 3.3%). Jessup also says “there are no streams or royalties on the precious metals” at R2. Franco-Nevada $FNV, the royalty and streaming company, holds a precious metals stream on two areas of Levack, but the technical report doesn’t publish their boundaries, so for now, investors only have Jessup’s word that R2 sits outside the stream.
@StableBread

Fajasy on X

Q2 2026 was the first quarter of positive FCF at Magna Mining $MGMNF (TSX: $NICU), but only because cash from March sales arrived in April. The quarter set Magna-era records for revenue and cash margin: → Revenue: US$21.5M, after the precious metals stream and higher smelting and refining charges. → Cash margin: Record US$6.4M, or US$1.41/payable lb, up from US$4.3M in Q1. → Operating cash flow: US$6.4M, including US$4.8M of March sales paid in April. → Free cash flow: US$3.7M, even though operating cash flow absorbed US$3.8M of exploration and evaluation spending, mostly at Levack, Magna’s flagship restart project. Adjusted for the US$4.8M of March sales paid in April, Q2 FCF was an outflow of ~US$1.2M, and H1 2026 as a whole was a US$10.5M outflow. At the mine level, McCreedy West (Magna’s producing mine) generated a US$10.8M cash margin in H1 2026, covering its US$3.6M of sustaining capital almost three times over. But Levack, corporate costs, interest, and working capital kept the company as a whole cash-negative. As of June 30, 2026, Magna held US$28.2M of cash. With net proceeds from Alpayana, the Peruvian mining group that bought 19.9% in August, the September deck puts cash at ~US$124M. Magna’s only debt is US$16.9M of unsecured 10% convertible notes due March 5, 2029, a third of which Dundee Corporation $DDEJF, a Toronto investment company, bought. They convert at CAD$2.00/share into 11.98M shares, or 3.8% of the current share count. Magna has funded itself mostly with equity, so the share count rose from 163.4M at the end of 2023 to 313.35M after Alpayana, up 91.8%. Options and share units add more. At June 30, Magna had 12.35M options at a weighted average exercise price of CAD$1.21 and 1.73M restricted and deferred share units. At CAD$2.45, 9.64M of the options are in the money, and exercising them would give Magna ~US$5.1M of cash. Counting the in-the-money options, the share units, and the notes, the diluted count is 336.70M (313.35M + 9.64M + 1.73M + 11.98M).
@BrokenMoats 2 clicks

Broken Moats on X

$DNA another perfectly rational move, happens daily across this low quality business, low quality balance sheet biotech tangential name space (ironically while actual biotech names sell off due to rates). My biggest question is why are these co. not raising $$$, all of them need money in this basket and their stock prices are up 100's% points in a very short period of time (few months). Wh not stretch the life of the company and fix the balance sheets?
@StableBread

Fajasy on X

Half the gold, platinum, and palladium in ore from McCreedy West, the producing mine of Magna Mining $MGMNF (TSX: $NICU), goes to Franco-Nevada $FNV for $1,200 per gold-equivalent ounce, 29.0% of the average gold price in Q4 2025. Magna inherited the deal, a precious metals stream, when it bought McCreedy West from KGHM $KGHPF, the Polish copper giant. A stream is a deal where a financier pays a miner upfront for the right to buy part of its future metal at a discount to market. Magna’s stream gives Franco-Nevada 50% of the gold, platinum, and palladium in ore from McCreedy West and “certain areas” of Levack and Podolsky, until the deposits run out or 2048. Franco-Nevada pays 60% of the monthly average gold price per gold-equivalent ounce (platinum and palladium converted into gold) from McCreedy West, capped at $1,200/oz once gold tops $2,000. In Q2 2026, the stream cut net revenue by US$3.9M, so revenue would have been ~18% higher without the stream. CEO Jason Jessup called the stream “a bit of an overhang” on McCreedy West, and in April said its terms are “definitely open for discussion” with Franco-Nevada. The higher gold climbs, the more the stream costs Magna, and I wouldn’t count on Franco-Nevada softening the terms. Crean Hill, Magna’s permitted nickel mine, carries no Franco-Nevada stream, and Jessup says R2, the high-grade zone Magna found at its flagship Levack mine, has none either. At Q4 2025’s gold price, Magna kept 64.5% of the value of McCreedy West’s gold, platinum, and palladium (50% + 50% × 29.0%). That means a stream-free ounce from Crean Hill or R2 is worth 1.55x as much to Magna as one from McCreedy West (100% / 64.5%). The stream also covers two areas of Levack, including the Morrison deposit. Franco-Nevada’s filings set the price for its Sudbury streams at $400/oz, rising 1% a year from July 2011, and its later increases applied to McCreedy West only, so Levack’s price would’ve reached ~$460/oz by Q4 2025 ($400 × 1.01^14). So at Q4 2025’s gold price, Magna would keep 55.6% of the value of Levack’s streamed ounces (50% + 50% × ($460 / $4,141.90)), less than the 64.5% it kept at McCreedy West.
@StableBread

Fajasy on X

Elmet $ELMT expects Masan High-Tech Materials, its Vietnamese tungsten supplier, to stay its key refiner even after a U.S.-funded plant in Nevada comes online, and it bought 4.99% of the company for $124.75M on October 1. Masan High-Tech Materials (UPCoM: MSR) mines tungsten at Nui Phao in Vietnam, refines the concentrate into APT (ammonium paratungstate, the traded form of tungsten) and oxides, and calls itself the largest producer of processed tungsten outside China. Elmet, which turns tungsten into parts for U.S. missiles and jets, has bought from MSR for 12+ years, and the deal values MSR at $2.5B. The 55.1M shares came from a Masan Group (HOSE: MSN) subsidiary, so the $124.75M goes to MSR's parent, not into MSR. Along with the stake come (1) an MSR board seat, (2) an 18-month lockup on Elmet's MSR shares, and (3) 8+ years of supply that MSR puts at ~1,250 tonnes of WO₃ (tungsten trioxide, the standard measure of contained tungsten) a year, ~$1.5B of revenue to MSR at today's prices. That's ~$187.5M a year of spend with MSR ($1.5B / 8), equal to 82% of Elmet's $228.5M of TTM revenue. On September 14, Elmet's deck labeled ~$100M of the U.S. Department of War's (DoW) $450M "Strategic Investments in Elmet Refining & Trading," its new tungsten buying and trading division, to build a "diversified feedstock portfolio." The October 1 deck relabels the same ~$100M "Strategic Investment in Masan," and the stake cost $124.75M. At $2.5B, Elmet paid 10.7x the ~$233M of net profit MSR expects for 2026 ($2.5B / $233M). For context, APT was $3,040/MTU (metric ton unit, 10 kg of WO₃) on May 29, up from $330 in January 2025 per Elmet's deck, and Elmet's own 2031 targets assume $1,500/MTU. Elmet's 8-K also says it won't participate in MSR's 2026 interim dividends. On October 1, the day the shares traded, MSR's board proposed a second 2026 interim dividend of VND 5,000/share (Vietnamese dong). VND 5,000 is 8.5% of the VND 58,760/share Elmet paid, or ~$10.6M on its 55.1M shares. In September I wrote that Springer, the Nevada APT plant, gives Elmet the one step it didn't own: Turning tungsten concentrate into the oxide its powder line starts from. Elmet's deck calls MSR a "long-time supplier and processor of blue tungsten oxide (BTO)," so MSR already handles the conversion for Elmet. So the step Elmet didn't own in July stays with MSR, and Elmet paid 10.7x MSR's expected 2026 profit for its 4.99% while its own 2031 plan assumes APT at under half the May price.
@StableBread

Fajasy on X

My investing thesis in a nutshell (w/examples): 1) Buy with a strong margin of safety or stock price near/below cash and/or book value. 2) Buy in industries and/or markets where the money is flowing. Makes it a lot easier. 3) Buy the best early and/or the most overlooked in that particular industry. 4) Pay up for unfair advantages, excellent mgmt teams, and companies with huge latent pricing power. 5) Sell when the thesis breaks. Or a much better risk/reward setup hits your desk. Otherwise continue to add/hold. Don't track stock prices. Track the main business KPIs like any competent mgmt team would. Example #1: Bought $NBIS 4x mid $20's (best overall). Then bought $BRUN common and warrants pre-merger (most overlooked). Example #2: Bought $FTEK $1.39. Cash floor new excellent operator CEO. Strong upside potential w/data centers. Example #3: Bought $BABA $70's. Strong margin of safety, market leader, unfair advantages. Sold $170 for better risk/reward. Example #4: Bought $ELMT @$19 and @$14. Unfair advantage. Strategic. Cheap. Critical in strong growth industries. Example #5: Bought $TOST @$24. Beaten down due to macro headwinds and new/early $DASH competition. But almost everything in business stronger and expanding to new verticals. Lastly, if you're unsure or don't fully understand the business. Just say no. In fact, say no to most stocks. Most probably your best idea is already in your portfolio. Don't lockup your money in a 3/5 setup, you're trying to make outsized returns! And sub to my newsletter (link in bio) if you want my deep dives. 😉

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