First entered SBM with 25 000 at 60.5c in July 2013. Then...

First entered SBM with 25 000 at 60.5c in July 2013. Then accumulated a bit as it went up to 94c, then watched it go down, down, down to the 30c range, accumulating more as it went below 40c. Then, it went into the teens, more accumulating. Saw it touch 7c and decided to hold. By then was holding 70 000+ at 50c average (ouch indeed). As it came back into mid-teens late last year, I bought more and brought my average down to 36c or so with 110 000 by then.

Then it turned around, made my first sell of 20 000 at 34c, then another 10 000 at 58c and another 10 000 at 54c since I thought it was running out of steam in short term. Sure it went to mid 40c.

Just this Mon, I sold another 15 000 at 64c. Now holding 56 500 at 28.8c average.

What kept me so firm about SBM? It had a pretty large cash reserve in 2013 that they could burn when the going got tough. With long-dated convertible bonds backing the cash, they were able to ride the rough seas, though Simberi and Gold Ridge proved most uncooperative. Gwalia was the reason I held on, since that mine is their flagship and what they could keep running if the gold price did go well below US$1 000/oz as many predicted was possible, including Jim Rogers.

But by far the factor that gave SBM the break were three black swan events - the cyclone that knocked out Gold Ridge and hence its handover to the Solomon Islands government, the drop in the AUD and the collapse of the oil price beginning last August that brought the commodity boom to a convincing end. Gold Ridge was a basketcase that needed to be let go and they managed to do it with a full liability discharge... going off scot-free. The drop in AUD made their best mines super-cash flow generators. The final factor shaved the labour bottleneck and production costs, which I believe was instrumental in bringing Simberi to cash flow positive position.

Not to downplay Bob Vassie's work thus far in his current term. There is no question that Tim Lehany didn't have the right mindset to buy mines at the market top, which is so natural for people to do given that everyone else was doing it. However, I feel Bob Vassie's true capabilities can be put to the test now that the oil price has settled in such a low level and the AUD is much lower. We can see to what extent SBM's operational performance and increase in reserves will fare going forward.

I am not speaking of this purely in hindsight. If you track back to my posts in the past on SBM, you will see that I was quietly comfortable about holding this stock though I had my concerns.

I think those who held onto SBM for a while and trusted in them even when it sunk to 7c deserved some praise for their valour and possibly good judgment on the fundamentals. Congratulations to my fellow SBM shareholders... greener pastures lie ahead