Contrarian Codex — Important portfolio changes (selling F3 & Guanajuato)
"With a 16.5% cash position, I feel like that balance and 'sleeping level' is achieved following the sale of these two names." — raising cash purposefully in a still-volatile macro, not capitulating on precious metals.
One-line take: Mart sells F3 Uranium (FUU, +36% on the remainder) and Guanajuato Silver (GSVR, +220%) to lock in gains and raise cash by ~3%, reaching a 16.5% "sleeping level" in his target 15–20% range; Cosa Resources stays as the cleaner Athabasca replacement and the existing gold/silver sleeve plus newly added Merlin absorb the freed exposure.
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| COSA | Cosa Resources | — | Positive | Retained as the cleaner Athabasca Basin play — Denison JV structure at a much tighter share count and, in Mart's view, a better management team; the reason he is comfortable exiting F3 without losing Athabasca exposure. | read ↗ |
| FUU | F3 Uranium | — | Negative | SOLD — world-class JR Zone geology (7.5 m at 30.9% U, 4.5 m at 50.1%) undercut by chronic dilution: ~631 m shares vs ~265 m at the 2022 discovery, ~700–750 m fully diluted, zero defined resource, and a Denison debenture share-drip running quarterly regardless of price; +36% on the remainder. | read ↗ |
| GSVR | Guanajuato Silver | — | Negative | SOLD — Q1 2026 "record" financials driven by metal-price tailwinds while AgEq output fell ~17% YoY and actual silver ounces dropped 11% post-Bolanitos; ~57% share dilution in twelve months leaves per-share net income below one cent; cost structure still elevated heading into H2; +220% locked in. | read ↗ |
2. Talking points
Why these sells & raising the cash cushion
- Both sales are driven by a dual motive: company-specific concerns and the desire to raise the cash position by ~3% — Mart stresses neither sale is a verdict against holding for those with different goals.
- The two exits plus the recent Merlin addition land the portfolio at 16.5% cash, squarely in his 15–20% target range — long enough to participate in a still-strong market, protected enough to sleep at night in a volatile macro.
- He remains bullish on gold and silver broadly; plenty of exposure stays in place via other Codex holdings, so the precious-metals sleeve is being reshuffled, not abandoned.
F3 Uranium — great geology, broken capital structure
- The JR Zone geology is legitimately world-class: 7.5 m at 30.9% U including 4.5 m at 50.1% from PLN24-176 — bonanza-grade by any Athabasca standard. The team's track record (J Zone at Waterbury, Triple R at PLS, Tetra at Broach) is respected.
- The problem is capital structure: shares outstanding grew from ~250–280 m at the 2022 JR discovery to ~631 m by mid-2026 — a 130–150% increase against zero defined resource and zero published economic study.
- Fully diluted count is ~700–750 m once roughly 65 m options/RSUs, 35–58 m warrants, and 26.8 m shares from the Denison convertible debenture (at C$0.56) are included.
- Successive raises at lower prices — C$0.24 (mid-2025), C$0.20 (April 2026), C$0.143 for the Denison debt settlement — each issue more shares for the same exploration dollar, compounding the dilution math against shareholders.
- The 9% Denison debenture coupon is paid partly in shares, adding a steady quarterly drip that continues regardless of price — exactly the wrong feature after four years of sideways-to-lower trading.
- Cosa Resources gives equivalent Athabasca/Denison-JV exposure at a tighter share count and what Mart considers a better team, making F3 structurally redundant in the portfolio.
Guanajuato Silver — a record that isn't a record
- Q1 2026 headline figures look like a clean turnaround — record revenue ($43.1 m), record EBITDA ($13.1 m), record mine operating income ($14.3 m), first-ever quarterly net profit ($5.7 m) — but the driver is metal-price appreciation, not volume.
- Silver-equivalent output fell ~17% YoY (614,000 oz in Q1 2026 at 57.81:1 vs 738,006 oz at 89.68:1 in Q1 2025), and actual silver ounces dropped 11% (339,104 vs 380,406) despite the $30 m Bolanitos acquisition adding a gold-rich mine — legacy operations went backwards.
- Share count ballooned from 472 m (Q1 2025) to ~743.8 m currently — ~57% dilution in just over a year from the Bolanitos equity component, bought deals, private placements, and pending warrant conversions. The "record" $5.7 m net profit works out to less than one cent per share on that count.
- Cost structure remains elevated: Q4 2025 EBITDA went negative on the Ocean Partners gold-loan derivative ($6.8 m), Cata mill write-down ($1.2 m), legacy VAT ($2.4 m) and legal accruals ($2.8 m). Management flagged AISC stays high in H1 2026 because the $35 m capex program is front-loaded.
- The structural risk: at silver above $70 and gold above $4,400 — near all-time nominal highs — GSVR barely scraped into positive net income. A retrace to $30 silver flips operating leverage into reverse; Hecla ($15–17/oz AISC) and First Majestic (high-end ~$28) can weather that; GSVR as structured likely cannot.
What he keeps — Cosa, the precious-metals sleeve & Merlin
- Cosa Resources stays as the primary Athabasca vehicle: Denison JV structure, tighter share count, management Mart prefers over F3's team.
- Existing gold and silver names in the Codex portfolio remain untouched — the sells are a vehicle swap, not a view change on the metals.
- Merlin Labs (MRLN, added recently) absorbs part of the freed capital as the portfolio's first non-commodity name — the asymmetric AI-autonomy bet detailed in the 26 May deep dive.
3. In plain English
FUU — F3 Uranium Negative
F3 owns a piece of what could become a world-class uranium mine in Saskatchewan's Athabasca Basin — the drill holes are stunning, genuinely among the highest-grade hits the industry has seen. But there is a difference between finding something exceptional in the ground and delivering value to shareholders, and F3 keeps failing at the second part.
When the JR Zone was first discovered in 2022 the company had roughly 250–280 million shares. Today there are ~631 million, heading toward ~750 million once you count all the warrants, options and a debt-to-shares deal with their partner Denison. That's a 130–150% increase in share count in four years while the company still has no official resource estimate and no economic study — they haven't even formally told the market how much uranium is there or whether mining it makes financial sense. Every time they need money they issue more shares, and lately at progressively lower prices, which makes the maths worse each round.
Mart locked in a +36% gain on the remaining position and moved on. He is not saying the geology fails — it may still get bought out or prove up a world-class resource — but he doesn't want to keep sitting in something where the share count compounds faster than the discovery progresses. Since Cosa Resources already gives him equivalent Athabasca/Denison-JV exposure at a tidier capital structure, F3 is simply redundant.
GSVR — Guanajuato Silver Negative
Guanajuato Silver reported what looked like a breakout quarter: record revenue, record EBITDA, first-ever quarterly profit. The catch is that almost all of it came from silver and gold prices hitting all-time highs — not from the company actually mining more metal. Silver-equivalent output fell 17% year-over-year and actual silver ounces dropped 11%, even after spending $30 million to acquire a new gold mine (Bolanitos). The operations went backwards; the metal prices bailed them out.
The share count is the other problem. A year ago GSVR had ~472 million shares. Today it is ~744 million — 57% more shares in twelve months from the acquisition, private placements and warrants converting. On those ~744 million shares that "record" $5.7 million quarterly profit is less than one cent per share. And management themselves flagged that the cost of production per ounce is still elevated heading into the second half of 2026 because the heavy capital-spending program is front-loaded, so margins remain thin at any price below today's highs.
Mart locked in a +220% gain and moved on. He is still bullish on silver and keeps other silver names in the portfolio, but he wants exposure to producers that stay profitable even if silver drops hard — and GSVR as currently structured cannot clear that bar. A great call option that delivered exactly what it should; not the right vehicle for the next leg.
Analysis distilled from the Contrarian Codex written report (PDF linked above). For personal study — not investment advice. Source material © Contrarian Codex / "Mart".