Late last week, I bought five stocks – spending a total of £12,783 (just under 13% of my cash). Some of these are initial positions which I intend to top up. Ultimately I am looking to have 20-30 stocks in the portfolio but I will  start at the lower end of that.

• Anglo American – 600 at 540p. Clearly there is a balance sheet concern here that has yet to be fully addressed and I think it now almost certain they will need to cut the dividend but nevertheless for the long term I think the value exceptional. I like the inclusion of platinum and diamonds in addition to the copper, iron ore and coal.
• BHP Billiton – 400 at 990p. A stronger balance sheet and reasonable margins in iron ore even at current prices should make this a relatively safer play.
• Petra Diamonds – 4000 at 76p. Recent production numbers were fine and although prices fell they were not out of line with what I would have expected. Debt facilities are more than sufficient and helped by quite a bit of flexibility in the capex program, but there is risk on covenants which is what is driving the price. Petra has a great long term margin expansion story coupled with production growth and given that I expect they will ultimately be able to convince lenders to remain supportive.
• Caledonia Mining – 5000 at 42.6p. Moving to small caps, I have bought a small stake in Caledonia mining which operates the Blanket Gold Mine in Zimbabwe. It has net cash on the balance sheet, and all in sustaining costs below US$1,000/oz. They do have some capex commitments over the next few years to extend the life of mine and increase production which means that the (generous) dividend could be at risk if the gold price falls much further but that is not my expectation.
• Capital Drilling – 1500 at 24.1p. Another smallcap – this time mining services – with net cash on the balance sheet and cash flow generative in the last quarter despite operating at less than 40% capacity. Most of their revenues are currently from long term contracts including production (rather than exploration) drilling so I am comfortable they are well placed to weather current conditions with significant upside when the cycle turns.

I said in my last post I was looking forward to further red days on the screens as buying opportunities. In which case I shouldn’t be the least bit upset that the shares I have bought so far are already down 8%. Fortunately with 87% of my portfolio still in cash that means the portfolio as a whole is down only just over 1% to £98,924. But I had better get cracking as I have just 5 days left to my self imposed deadline to be fully invested within 10 trading days.