I mentioned Vendetta Mining (OTCMKTS: VDTAF) as my top summer stock pick several weeks ago. It fell hard with the stock market in March and then bounced back up to consolidate until it soared again in July to rally up to close just under 10 cents a share. Since then it has been consolidating in a very narrow range with resistance at 0.095 and support at 0.075 on its main Vancouver listing where it trades as VTT. Take a look at the chart.
This is a very narrow consolidation trading range.
Several mining stocks have simply soared so far this month, but Vendetta remained in this consolidation trading range, because it already went up so much in July. Meanwhile in the past week gold and silver prices themselves appear to have entered some sort of short-term consolidation too as big commercial traders have recently closed out both some of their long and short positions according to the latest commitment of traders report. This isn’t too shocking, because the US dollar index, which tends to trade opposite to gold, is going through some sort of oversold bounce in the context of a severe bearish trend. This morning gold is down.
This is setting the stage for Vendetta now. I own this stock and it appears to me to be soon on the verge of breaking out again to spark another nice rally. If you look at a long-term chart you can see that the potential is exciting.
Vendetta is still cheap, because the stock has a market cap of roughly $10 million USD. In a metals bull market most exploration stocks end up reaching markets caps of $25 million USD and as we have seen from recent rallies in some of these stocks when they move they can move.
Vendetta’s main project is the Pegmont Project, an advanced lead/zinc property based in mining friendly Australia. Silver is typically also a byproduct from lead/zinc mining but because prices had a sharp decline in 2018 and 2019 shares of Vendetta also fell. Of course now the story is different for the metals.
Australia is the right place as it is the second largest lead producer in the world, the third largest zinc producer, and the sixth largest silver producer too. The project has undergone advanced exploration work with a full 43-101 report, which reveals that an 8.9 million tonnes open pit mine is feasible and would be profitable enough to deliver a 24% return on IRR at current metals prices.
Companies with an advanced stage project like this often make deals with bigger companies to bring things to production. The Zijin Global Fund currently owns 4% of the companies shares while Solitaro Zinc Corp owns another 4%. Management owns 6%.
You can access the complete 43-101 report by clicking here. Here is a video presentation to give you an idea of what the project looks like.
We appear to be at an interesting juncture for the stock. The rally in July was nice, but the consolidation it has recently put on is nice too, because it shows the behavior of the stock. It didn’t just surge and collapse, but instead is making a nice stair step pattern and looks ready to make another step up.
Disclosure: Mike Swanson owns shares of Vendetta Mining. Because it is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this post. Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Vendetta Mining. This third party paid Timingwallstreet Inc., $10,000 to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.