The Deep Value Grading System

An At-a-glance ‘A-F’ Grading System for the Speedy Determination of Deep Value in Mining Stocks

If Resources* are Presently Valued by Fully-Diluted Market Cap at..
PercentageGrade
< 1-1% of SpotA+
2-3% of SpotA
4-5% of SpotA-
6-7% of SpotB+
8-9% of SpotB
10-11% of SpotB-
12-13% of SpotC+
14-15% of SpotC
16-17% of SpotC-
18-19% of SpotD+
20-21% of SpotD
22-23% of SpotD-
> 24% of SpotF

*Proven & Probable Reserves will always be preferred to Measured & Indicated. However, in the absence of Proven & Probable Reserves, Measured & Indicated Resources will be utilized. In the absence of Measured & Indicated Resources, 50% of Inferred Resources will be utilized. In instances where Measured, Indicated & Inferred Resources are stated, 100% of Measured, 100% of Indicated & 50% of Inferred will be utilized.

What do I do with the grade?

That’s up to you. I use the metric to gauge how an investment is faring relative to peers, non-peers and to spot prices over time. It is also a useful means by which to identify those stocks whose resources have been rewarded a premium. Why have they been rewarded a premium? What makes them different? But most importantly, it’s a means by which to identify stocks that possess two special characteristics:

  1. A Margin of Safety
  2. Large Rerating Potential (Cheap Reserves)

Beware the Deep Value Trap

Just because it has a good letter grade doesn’t mean it isn’t a deep value trap. It’s up to you to find out why lbs. of this or ozs. of that are on sale. After all, some of the cheapest uranium lbs. by market cap available could prove the most expensive you ever buy.

Grades for individual mining stocks will be furnished upon request. Please email me at [email protected]