Gold Standard Ventures

Gold Standard Ventures is another darling in 2012.  It fell with all other junior exploration.  This company's major property is the Railroad project located in the Carlin Trend in Nevada.  Good share structure (89.6 Million Fully Diluted) 50% with institution investor, 20% with insiders.  Very good drill results, very good technical and management team.

The only possible concern for the company is it might require more capital to finish the drilling program.  It still has 5 million in April.

It trades on both TSX Venture and NYSE MKT.  It is currently trading at 88 cents and has almost double from the bottom (47 cents).

I don't own any shares of Gold Standard Ventures.

BMO Junior Gold Index ETF

BMO has a junior etf ZJG that trades on Toronto. It tracks the Dow Jones North American Select Junior Gold Index.

ETF Profile in pdf

The volume is a bit low.  A good way to buy a diversified junior gold mining portfolio.

I don't own any of the ZJG.

Goldquest

Goldquest was the junior darling for 2012 and fell back to 30 cent level and trading back up to 54 cents today.

Technically it is strong (I use Recognia provided by TD Waterhouse Discount brokerage) and they are drilling another property.  An ex Inmet executive had joined and 14 million in cash.  Good potential entry point at this level.

I don't own any Goldquest stocks.

Colorado Resource follow up

Colorado resource has release its step out drill holes on Thursday.  Drill hole 2 shows up nothing and drill hole 3 and drill hole 4 interval and grade are not as impressive as drill hole 1 that triggers the sell off.

It is possible the mineralization is on the other side and there is still hope that the next set of drill holes will be better.  If the next set of drill holes are similar to 3 and 4.  This might not be as big and economic as previously thought and the stock will continue trend lower.

On the technical (MACD) of the stock, the sell signal shows up on May 29.  It seems like it is trending lower.  Of course if there is another great drilling results.  That will change the whole graph and it will reverse the trend immediately.  So I would not depend on the Technical analysis to trade this stock.

According to Dr. David Groves, for a porphyry the best location is usually 35 km to 50 km away from a mine.  North Rok is only 15 km away it might not be as impressive as Red Chris.

I don't own any Colorado Resource stocks.

Another sell off for gold stocks

Today the job numbers in the US are impressive and bring Dow up 200+ points.  On the mining side, there is another sell off (around 5% for the miners) because the price of gold had dropped almost 2% today.  By looking at the gold chart and the Dow.  It seems like Dow is running out of steam on the upside and due for a correction and gold is trending on the upside.  Maybe I am wrong and time will tell.

Browsers

I had tried to use different browsers to view the blog.  I find that when I use IE 8 and IE 9 a lot of things are out of line and looks ugly.  Its perfectly fine when I use Google Chrome.  Does anybody has the same problem?  If yes, please comment.  Thanks!

BCIT Mine 1010 Mineral exploration and Mining for the Business and Investment Community

I had attended this course back in 2010 taught by Dr. Robert Stevens.  He is very knowledgeable in the mining industry and it is a great overview of the mining industry and the basics of investing in mining stocks.

It also includes the textbook worth $70 that I had attached the link from amazon.ca.  I think it is a good starting point for some of you who is interested in the mining industry.

I sat beside a securities lawyer who later was recommended to help us to bring a company to public.  Some are analyst from brokerage firms that was flied in from Toronto.  Some students stock brokers from the local firms and a lot of investor relations personnel who was new to mining.  One of the fellow students is the editor of   www.ceo.ca 

BCIT Mine 1010

It is a very popular course.  I recommend you should register early if you are interested in it.  My Point is that the students are very high quality and you can definitely learn something from it.

My experience with a junior exploration company

I would like to share with you one of my experience with junior exploration company.

I was invited by a friend of mine to go to a boat part in a rainy evening.  It was an older boat and around 12 people had attended.  The host gave us a warm welcome and their whole family was there and gave us a great evening.  There were wine and cheese, some salad and some finger food.  There was this older gentlemen, he is a self learned prospector and had built a mine before.  He was talking about all the stories of how he had prospected the areas and find new mining properties.   Now he had retired and his older son is the CEO who runs the company (listed on the TSXV), his daughter is the secretary and the younger son goes to the field and do prospecting work.  It was a fun night and we exchange business cards at the end.

The next Tuesday, the older gentlemen gave me a call.  He told me he have something for me and ask me to go to his office.  I agreed and went.  I went to an older but very nice building downtown Vancouver and sat down with them in the water view boardroom.  We chatted for a while and we exchange some ideas.  Then he had showed me what he had done and think it might be something I personally wanted to invest in.  It is a mining property that they had done some work in the past and went out of money and would like to find an investor to invest some money to finish the job.  The amount is about $50,000, they told me it is not a high potential property but a o.k. property.  This property then qualifies as a property of merit and can list the company on the TSX Venture exchange.  He gave me the info, went over it and do some due diligence with some of my geologist friend and decided not to proceed.  About a week later, I called back and told him that I am not going to proceed because the potential is slim.  The older gentlemen then told me I know nothing about mining and hung up.

Since then, I had dug up a lot of smaller mining juniors and find the following:

1)  Spend a lot on Investor relations
2)  Spend a lot on management (including family members)
3)  Stories that sounds compelling but it doesn't work in the financial market
4)  When they ask you for money and you say no, they will start to be impolite.

I had recently checked the company's balance sheet on sedar.com and now has less than $200,000 in the bank account.  Which falls into to John Kaiser's category of vanishing juniors.  I guess I just don't have a chance to meet with the other 700 or so companies that do the same.

For these juniors, they spent too much money on IR and ask for people's money and spent it on IR again and ask for more money instead of drilling more holes in the ground that creates real economic value for their company.  70% to 85% of the money has been spent on salaries, investor relations and other general and administrative expenses.  Back in the old days, information was hard to get and you don't have the information unless you are a shareholder of the company or you have to contact your broker.  Now with internet, all the information are so transparent, the mining exploration industry really have to evolve to be more efficient, seek new ways to find new economic deposits and be very honest with their shareholders in order for the whole industry to survive its current crisis.

In-situ value not equals to profitability

A lot of friends have show me companies that have high in-situ value in gold and copper, but the stock just don't go up.  They want me to find the answer.  We can look at it this way.

How much is it going to cost to take the metals out?

If the cost of extracting the metal out cost more than the metals itself, is it still worthwhile to do so?  I guess not.  The IR people often use in-situ value to convince the investors to buy into projects that might never be able to go into production.  For example, the whole mountain somewhere in Northern BC has 5 Billion pounds of copper.  But it cost $15 billion to build the mine.  It is huge but it is not economic, mining companies will never look at high capex now in such a market right now.



Full Meaning of In-Situ

What will happen is the company will run out of money someday before it got brought out.  They will have to go back to the market and raise more and more money.  Your stocks will be end up being diluted and worth less then what you had paid for.

In short, use in-situ value as a reference not as a reason to buy a stock.

Rick Rule at Cambridge House conference

I find this very interesting.  I own none of the shares mentioned in the video.

Stocks mentioned
Ivanplats
Lydian Gold
Sprott Inc
Sprott Physical Platinum and Palladium Trust
Toscana Energy