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Showing posts from October, 2017

5 Questions to ask before you invest plus one more from me

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The Investing News published an article earlier this week titled "5 Questions to Ask Before You Invest in a Gold Junior Mining Stock."  It is a decent piece with some good advice from a variety of people in the mining industry.  The questions the article suggests you ask are:

1. Who is on the management team?  2. Where is the property? 3. What is the geology like? 4. How far along is the project? 5. Is the business viable?

Let me add one more:
6. Does your mining company plan on "diversifying" into the marijuana or cryptocurrency/blockchain space?
If the answer to this is "yes" or "maybe", then run the other way because that would signal to me that the mining projects probably are not viable and the company is jumping on a bubble bandwagon.  Just because it is called cryptocurrency mining doesn't mean that it has anything to do with mining!  But that is exactly what MX Gold (TSXV:MXL) is doing (link) and in a news release issued today the CEO stat…

Garibaldi answers some questions and jumps another 33%

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Garibaldi Resources (TSXV:GGI) issued a news release this morning that answered some of my questions in yesterday's post.  They've now drilled an additional 11 holes since EL-17-01 (3,000m in total) and all of those holes have intersected "broad sections of disseminated to blebby net textures sulphides (pyrrhotite-pentlandite-chalcopyrite), hosted in olivine gabbro".
To the company's credit, they have also posted more than 20 pictures of core samples from the E&L drill program and pictures showing the rugged terrain on their website (link).  I commend that kind of disclosure and transparency.  The core highlights various intercepts with massive sulphides, which should carry good nickel and copper grades.  But, the question remains how broad are the massive sulphide zones versus the disseminated sulphide zones, which may not contain enough mineralization to be economic.  So, while I appreciate the additional information from the company, on the assay results w…

Can WHY's Frank Marasco turn $10 into $326 million?

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While we are waiting to see what the Alberta Securities Commission does on West High Yield (TSXV:WHY), I perused the bullboards to see if some investors still think this is a credible deal.  The number one thing that confirmed was that there are a lot of gullible people posting on the bullboards.  But one post prompted my interest, as it stated that WHY CEO Frank Marasco and his family control almost half of WHY shares.  As it turns out, Frank and family really do control about 43% of WHY shares.

I had to do some digging to find out how much Frank paid for these shares.  Going all the way back to the June 2006 WHY prospectus, I learned that the 20 million shares held by West High Yield Holdings Ltd. were acquired for less than the cost of a pizza.  Ten dollars!  If the deal is real, which of course I do not believe given the evidence to the contrary, then those 20 million shares alone could be worth C$326 million.


A 15-bagger without a single drill result - Garibaldi Resources (TSXV:GGI)

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Sometimes you get the feeling that other people may have a lot more information than is publicly available when it comes to mining stocks.  A good example of that at the moment is Garibaldi Resources (TSXV:GGI).  The trading in GGI has been pretty wild the past two days, with the stock dropping 20% at the open yesterday and tripping a circuit breaker.  I thought that perhaps somebody got wind of results before they came out, but then the share price recovered the losses today and jumped 15% in the last 30 minutes of trading today. 

Looking back a little farther, trading volumes in GGI suddenly exploded in late July 2017 and the stock has traded an average of 1.5 million shares per day in Canada over the past three months.  What changed three months ago?  On July 27, 2017, the company announced that "Widespread pyrrhotite-chalcopyrite mineralization has been identified on surface in gabbroic rocks that outcrop over a broad area at previously unexplored "Anomaly A", appro…

One for the value watchlist: Chakana Copper

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A double thank you to IKN.  The first is for helping to bring viewers to this site, which is greatly appreciated and an honour.  Insight from IKN and the Angry Geologist have been extremely valuable to me in the past and their unbiased and helpful work was part of the inspiration for this blog.

The second thank you to IKN is for highlighting the pending RTO of Remo Resources (TSXV:RER - halted) by Chakana Copper Corp.  I've taken a peek and I really like what I see, both in terms of the team and the project.

The Team
David Kelley will be President & CEO of Chakana.  The last time I met David he was working at MMG as the Exploration Manager for the Americas, which means he looked at a lot of projects and obviously found this one to be one of the more interesting available.  David has an extensive technical background, including direct experience in Peru at MMG's giant Las Bambas copper project.  Joining David on the board of directors will be John Black, another strong techn…

Waiting for an update on West High Yield

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Trading in West High Yield (TSXV:WHY) was halted before the open on Friday.  It appears that IIROC is seeking "clarification of company affairs."
Bloomberg is doing some good work on this, with an update on WHY on Friday afternoon.  In a nutshell, the Alberta Securities Commission is looking into the purported transaction, the purchaser has a checkered past, and the purchaser's counsel (Baker McKenzie) is not aware that they are acting for them or any connection to the deal.

I'm waiting with bated breath to see what happens next with WHY and how quickly the deal unravels.  I've seen a lot of scams and frauds in my career, but this seems like the most obvious of the bunch.


WHY oh WHY?

As a follow-up to the last post, 2.36 million shares of West High Yield (TSXV:WHY) traded today and the stock closed at $2.00.  Clearly some investors think there is a chance that this may be a legitimate deal and the boards were buzzing.  Even Bloomberg picked up the story.  I like the part where Baker McKenzie, the reported law firm for the buyer, told Bloomberg that they have no knowledge of the deal!

WHY even filed a Purchase and Sale Agreement on SEDAR today.  Take a look at Sections 2.2 and 2.3, which basically state that the purchaser will wire USD$750M to WHY in exchange for share certificates representing one hundred percent of the then issued and outstanding securities of the Corporation.  Huh????  That is a takeover bid, not an asset sale.  How is management of WHY going to deliver 100% of the shares of the corporation, most of which are held by shareholders, and how do the shareholders get paid?  This is not even a viable transaction!  Never mind section 5.1.1.6 of the agr…

If is smells like a scam....West High Yield

This morning a little magnesium company named West High Yield (TSXV:WHY) announced an agreement to sell its mining assets for USD$750 million.  Is anybody dumb enough to believe that a company with access to USD$750M is going to pay this amount for a company with a market cap of $21 millon and a working capital deficit of over $2 million at June 30/17?  Shockingly, the answer is YES!

After WHY re-opened for trading at noon EDT today, the stock shot up from $0.36 to as high as $3.75 per share.  It has since pulled back to $1.40 per share with almost 200,000 shares traded.

A bit of digging suggests no evidence that the buyer, Gryphon Enterprises, LLC, is a business sufficiently large enough to come up with USD$750M (or probably even 1% of that).  Also, I noticed that WHY issued 1,893,333 units only about a week ago for $0.30 per unit.  I doubt a company in the midst of negotiating an asset sale would do a financing, and a deal this size doesn't happen overnight.

If it walks like a d…

WTF? (Why The Fall) - Golden Queen Mining

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The junior mining sector can be enigmatic.  Shares of Golden Queen Mining (TSX:GQM / OTC:GQMNF) closed yesterday at $0.57 and the stock trades an average of 57,000 shares a day on the TSX.  Without any news, or at least anything formally disclosed, the stock opened this morning at $0.33, down 42%!  At 1:01pm EDT, the company issued a release indicating that there is no undisclosed information.  The stock finished the day at $0.41, down 28%, with over six million shares trading hands in Canada and 6.9 million shares in the US, roughly 80 times the average daily volume.  WTF? One rumor I heard is that a newsletter writer was responsible with a sell recommendation.  The chart below shows the GQM share price for the past two years.  If the massive sell-off today was due to a newsletter writer's recommendation and you are a subscriber, ask yourself if you really should follow his or her advice on small cap stocks with limited liquidity.  You'll overpay to establish the position and…

Nice drill results from Canada Zinc...stock happened to rise 14% before the news

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Canada Zinc (TSXV:CZX) just announced some nice drill results after the close:
Drill Hole A-17-137 hit 57.79 metres Grading 11.79% Zn+Pb and 19.1 g/t Ag - including High-Grade Core of 22.61% Zn+Pb and 36.2 g/t Ag over 15.44 metres

Earlier today, I was wondering why CZX was up 14%.  It was a good day in the zinc space, but it was almost like somebody knew the news was coming.  Higher volume today, before the news, then on any other recent trading day in the past month.  764,502 shares traded today before the news, which was even more than the 409,400 shares traded on Sep. 15 after the last drill results were released.

Hmm, call me cynical but it almost seems like some brokers or investors at Leede Jones Gable and PI Financial knew these results were coming out based on their aggressive buying today.  They were 55% of the buy volume.  The stock also happened to rise substantially in the first half of September leading up to the last drill results news release.  I'm not saying this i…

Always read the disclaimers!

Before you believe anything you read from third parties in the junior mining space, always, always read the disclaimers!  Here is an example I received today in the way of a very promotional email linking to an article on International Battery Metals (CSE:IBAT).  Below are excerpts from the disclaimers in that article.  Kudos to the authors for full disclosure, but pity to the investors in IBAT who believed the glowing promo article and didn't bother reading the disclaimers and failed to realize that the article was for entertainment purposes only.  Ouch!

In this case the Company has been paid by International Battery Metals. In this case the Company has been paid by International Battery Metals one hundred and twelve thousand five hundred US dollars for this article and certain banner ads. This compensation is 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...O…

Buying junior mining stocks can be like buying lottery tickets, but it shouldn't be

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I've received a few emails in the past week aggressively pumping Los Andes Copper (TSXV:LA), so I thought I'd check it out even though these shamelessly promotional articles are almost always a huge red flag.  My message to mining investors is that they should run the other way when they see articles or emails written in single sentence paragraphs and using over the top, bullish language.  Here is why - if a Canadian lottery was paying these promoters, here is what they might say:
The Canadian government is giving away huge sums of money and every citizen is entitled to participate for as much as they want!
Not only can you make huge returns on your money, but the proceeds are absolutely tax free.  Where else could $10 get you millions of dollars...tax free!
Yet, not everybody has picked up on this lucrative opportunity yet, so investors should jump in as fast as they can before the masses get involved.
Of course, what they would fail to mention is that the odds of actually winni…