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Strategic Metals: A Prospect Generator Waiting To Shine

Philip MacKellar profile picture
Philip MacKellar


  • Gold and many gold equities are up.
  • Now that most gold names have rallied, a question is: are there gold names which have yet to shine?
  • Strategic Metals is one of those laggards.
  • Despite the underperformance, Strategic appears compelling for certain investors.
  • Interested investors must carefully consider the risks associated with this company’s business model, size, and commodity exposure.


Gold and gold-focused ETFs including the GDX and GDXJ are up. COVID-19 uncertainty, the economic downturn, and unprecedented government plus central bank actions have given gold new life. Here at Contra the Heard, we have benefitted from gold's return to form. Positions in Alacer (OTCPK:ALIAF) and Sprott (SPOXF) have shone, and others in Gold Resource Corp (GORO) and Major Drilling (OTCPK:MJDLF) show promise.

These investments were initiated between 2014 and 2018. Adding gold names at the time was not done because we are gold bugs or foresaw something like COVID-19; instead, mining, much like banking between 2009 and 2012, appeared undervalued and unloved which sparked our interest.

Strategic Metals' YTD performance vs GDX and GDXJ via Yahoo Finance

Now that many gold names have rallied, a question to be asking is, "Are there gold names which have yet to shine?" While Major Drilling mentioned above is one such name, another is Strategic Metals Ltd. (OTCPK:SMDZF) or SMD.VN on Toronto's Venture Exchange. Strategic Metals is a prospect generator based in the Yukon.

In 2015, I visited some the company's properties in the Yukon as part of the territory's annual tour for investors, analysts, and reporters. After the trip I wrote about Strategic Metals for the Globe & Mail. While there are many attractive attributes associated with Strategic Metals, it will never end up in a Contra the Heard portfolio because it is pre-revenue and is too small. This said, I did take a minor position for myself in various personal accounts and continue to hold it.

What is a Prospect Generator?

A prospect generator is a junior miner which maintains a portfolio of mineral exploration properties. They stake, explore, and purchase what they hope are promising precious or base metal deposits. Their goal is to explore or develop their most enticing deposits (often with a

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long SMDZF, ALIAF, ALACF, GORO, MJDLF, SPOXF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer The opinions expressed - imperfect and often subject to change - are not intended nor should be taken as advice or guidance. Contra the Heard Investment Newsletter is not an investment advisor or financial advisor. Contra the Heard Investment Newsletter provides research, it does not advise. The information enclosed in this article is deemed to be accurate and reliable, but is not guaranteed by the author.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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