Tuesday, December 5, 2017

Wesdome Gold - An Unlucky Miner

Wesdome Gold (WDO.TO) is an unlucky miner. The company owns an excellent mine, Eagle River, but it also has a big shareholder, Resolute Funds, that some time ago has decided that Wesdome is not a decent investment. As a result, since the end of 2016 Resolute Funds has been selling the company's stocks dragging them down to US$1.4 a share. The charts below document this process:  

source: Simple Digressions

Note that initially Resolute was a typical contrarian - the fund was purchasing Wesdome shares when nobody wanted them (until middle of 2013).

Then, after a period of strong accumulation, Wesdome shares started a vicious bull cycle. At that time (middle 2013 - beginning of 2016) these shares were going in the opposite direction than the entire precious metals market.

The start of a bull market in precious metals  (December 2015 / January 2016) made this bull cycle even stronger. In between (2016) there was a proxy battle between the company and Resolute Funds which resulted in another strong bull wave.

Then, in 1Q 2017 the shares topped and entered a bear cycle. This cycle is still intact and it looks like it is fuelled by Resolute selling Wesdome shares.

Summarizing - Wesdome is a decent miner (I particularly like its Eagle River mine which is located in an established gold camp in Canada) but as long as Resolute is throwing the company's shares in the towel it is hard to expect an end of the current bear cycle.


  1. Hello,

    Is Resolute done selling Wesdome?

    Thank you.

    1. Tom,
      Rather not. Since December 2017 Resolute has not released any new disclosures. According to the latest info (December 2017) they held 13.35 million shares of Wesdome and in December 2017, January 2018 and February 2018 as many as 16.5 million shares changed hands at the Toronto Stock Exchange. I doubt that Resolute was the only seller so they probably still hold a few shares.