McCoach: “A Penny Stock Safe Enough for your Portfolio”

This is a recent teaser from Greg McCoach, who writes the Mining Speculator for Angel publishing and also has a new service that tracks his personal portfolio. We looked at the first stock he teased from the eight he chose for his initial personal portfolio, but now he’s teasing another one … let’s check it out.

That first one, by the way, the “Rupert’s Paradise” silver mine owner, has fallen over the last three months even as Silver, it’s main ore target in that mine, is up about 20%. McCoach has picked some good performers in the past, though it’s been about a year since he had a teaser pick that really performed (he isn’t covered by Hulbert’s and I don’t have access to his portfolio, so I have no idea what his overall performance is … he claims, not surprisingly, that’s it’s super duper awesome). The subscription you’ll need to pick up if you want his full report on this company is Greg McCoach’s Insider Alert, which will run you about $2,000 (on special markdown from $3,000, of course).

Or if you just want the name of the company and some Gumshoe blathering, read on!

This is a new one, though, an Argentine miner that trades over the counter (though they may soon be on the Venture exchange in Canada).

I had a reader send in the solution to this one, but let’s look at the clues to make sure he was right.

First, though, a little whetting of the appetite from Mr. McCoach:

“I want to tell you about a site visit I recently took to the southern most portions of Argentina. The site lies in one of the country’s most remote and isolated stretches. I logged nearly 24 travel hours to reach it. In short, I was blown away by what I witnessed after I arrived… and as a result, I immediately bought into the company’s stock. So let me disclose – I own this stock in my portfolio.”

And he tells us why he owns it — it’s “undiscovered”, it has an extensive drilling program in place that they can pay for, and there’s potential for years of new discoveries and development on their properties.

The mine site is in a remote area of Argentina that includes some other significant mines, according to McCoach:

“The project is located in the Deseado Massif, Santa Cruz province, southern Argentinian Patagonia. It is 40 km NW of the world class gold/silver epithermal Cerro Vanguardia Mine owned by Anglo Gold – Ashanti. The area is now one of the most important mining regions in Argentina….”

and …

“Multiple systems of mineralization appear to be at work, including a gold/silver system, a zinc/indium system, and a polymetallic system featuring zinc, lead, indium, silver, gold, and copper. What we have here is a truly rare find, with unlimited upside.”

Well hey, “unlimited upside” sounds pretty nice, doesn’t it? Maybe they’ll find diamonds, too, or oil!

I just made that up. Sorry.

Indium is apparently quite rare and in high demand from some high tech industries, so that’s a big deal, but McCoach intimates that they’re likely to be going after gold and silver first, because it’s easier and can generate cash flow to do more exploration and development. I expect the fact that there are other gold mines around might help with the infrastructure, too, but that’s just a guess.

He says they have no barriers to development, by which I understand he means that the terrain, regulations, permits, and water supply shouldn’t be problems. I’m certainly no expert here, so I’ll have to take him at his word on that. The area of the mine is in Patagonia, and it is at least in part a mining province in a country that depends on mining, so perhaps it will “sail through.”

He also gives a couple specific clues — the price of the stock, which is on a nice climb from September to now and is right around $1.40, and the number of shares, which, fully diluted by options and such, stands at 32.7 million. If you don’t want to do the math, that means the market cap is in the neighborhood of $50 million, so truly a tiny company even by microcap miner standards.

So … thanks to a kind reader who pointed me in the right direction (he calls himself johnh39 … and another reader, Cool Hand, sent the solution in a bit later), I can tell you that this is …

Argentex Mining Corp (AGXM over the counter)

Those of you who have been around for a while know that resources and mining stocks are among my weaker areas personally, so I can’t really dig down easily and tell you exactly what to look for if you’re inclined to research this company. They have had a nice run up today and over the last week or so, undoubtedly as a result of this recommendation leaking out. Perhaps the Gumshoe faithful will drive it up further if you all are convinced it’s a great deal, with a tiny stock like this anything is possible (so be careful). If it does pop up, a look at it’s chart tells you it may well fall back again.

The shares have been on a nice drive since September — but I expect that date wasn’t chosen by accident, because right before then the shares cratered by about 30% in August (from $1.50 down to $1). The shares have mostly traded in a range between $1 and $1.50 for the last two years.

What else might you wish to know about these guys? The list is probably pretty long — but although this year’s drilling might already be financed do keep in mind that we’re talking about years and years and millions and millions if they’re actually going to develop their own mines in these places, unless they plan to sell to a major or partner the property, which is probably more typically what happens in these situations. Certainly they’re not going to be pouring gold within the next year or two even by the most optimistic predictions, so there may well be plenty of time for you to do your research on this one. If it was “undiscovered,” McCoach may have cured them of that … but eventually, interest may well wane without news or new discoveries.

Even the best McCoach teaser pick we’ve looked at so far, Duluth Metals, which began it’s advertising life well over a year ago, has had some serious backsliding after a huge run — it’s still up 145% on my spreadsheet, but for one brief, shining moment it crested over 300%. His three other teaser picks that I’ve tracked include one that’s up 10% and two more that are down significantly. And looking those up reminds me that I have to update the spreadsheet … a Gumshoe’s work is never done! The spreadsheet can be a little depressing these days, only about a quarter of the teaser companies I’ve revealed here over the past year are in the green (and only five of 200+ have doubled) — I hope your portfolio’s doing better than that.

So … feel free to give the rest of us your opinion on this one — I don’t really have one yet, though if reader sentiment is any indication many of you are fascinated by these tiny miners that have such “lottery ticket” potential. Go forth, researchify, and share with us!

I am not invested in any company mentioned here, and will not trade in their shares for at least three days.

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. I’ve kept a a close eye on Greg McCoach for the past year. It appears his number one stock pick
   is Pediment (V.PEZ). The 43-101 is due out any
   day. The core samples have been very positive
   with two monster holes. On the board of directers
   are 5 big wigs from other gold mining companies.
   10 newsletter writers are pushing PEZ.
   Bill

   [Reply]

   Posted by Bill Elliott | March 27, 2008, 9:37 am

2. Your spreadsheet provides startling insight to teaser stocks. Out of a total of 214 stocks that have been teased, 149 have declined while 63 have gained. 39 stocks have lost 50% or more while 20 have gained 50% or more. Moral seems to be STAY AWAY FROM TEASED STOCKS!

   [Reply]

   Posted by Charles Walter | March 27, 2008, 10:28 am

3. If you want a junior miner, I’d give GBM a look, they’ve done ok by me.

   [Reply]

   Posted by rusty | March 27, 2008, 11:09 am

4. Sorry that was GBN not gbm

   [Reply]

   Posted by rusty | March 27, 2008, 11:27 am

5. I recall a comment in a “Morningstar” article about Over The Counter Penny stocks: “Shame on you!” It pops up in my mind everytime OTC’s or Penny stocks are discussed. I will not even buy Nestle. That a company will not or cannot become a prime or ADR listing complying with or meeting US Exchange requirements says a lot to me about the company or the mindset of corporate management. It is perhaps my first screen.

   [Reply]

   Posted by Wayne | March 27, 2008, 11:41 am

6. luke burgess was already promoting argentex in june 2006 at o.97$

   [Reply]

   Posted by j.mihailescu | March 28, 2008, 5:31 am

7. There are political and environmental considerations with this stock. Argentina has imposed an export tax on gold that has angered big producers, and which will undoubtedly affect Argentex. Also, there are environmental groups that are mustering opposition to gold mining in Patagonia, particularly because of the need to build dams that will damage rivers. Whether you are an environmentalist or not, this should be a practical consideration.

   [Reply]

   Posted by Woman with Portfolio | March 28, 2008, 11:02 am

8. Thanks WWP — it’s always good to look into it when these guys (or any tout) tells you that the approvals are “in the bag” for mining companies. It’s very hard to predict what impact environmental, political or other concerns might come up. And if they’re years from producing, as this one probably is, the chances for something to happen expand significantly. Not to say McCoach is wrong, I don’t know, but, as you’ve noted, there’s always another side. Mining is almost always incredibly ugly, environmentally, and it’s often very politically sensitive.

   [Reply]

   Posted by StockGumshoe | March 28, 2008, 11:08 am

9. All I had to do with this teaser was right-click on the stock chart.. select “save picture as” and the file name is already “agxm_chart”!
   Makes you wonder if they want you to find it!

   [Reply]

   Posted by D_town | March 28, 2008, 1:20 pm

10. Rather than invest in this particular (and many other) foreign small cap companies, I would suggest looking at General Moly (GMO)listed on AMEX. This company is currently working on two mining projects in Nevada that will produce large quantities of Molybdenum. They have secured agreements of significant product purchase from several major steel producers (one of whom is a participating partner)and the Mt. Hope project has a full return of capital investment of 3 years. The stock has had some recent movement from a high near $12 to current price around $8. I look for this stock to climb once mining begins in 2009. For those who don’t know, molybdenum is utilized in high strength steel alloys. Prices for moly have increased nearly five fold since 2004 and demand continues to outpace production. It is estimated 18 million pounds a year of “new” production is needed just to keep up with conservative estimates of increased demand.
    This may be a much better investment for those of you looking for mining stocks and I believe it has potential for significant price growth.

    [Reply]

    Posted by MLJ | March 29, 2008, 1:08 pm

11. Pediment and Argentex have long been touted by ” The Secret Stock Files” or whatever it was, with Brian Hicks and his supposed hot licks which turn up mostly crappaho. Agora, in my impression, razzeled Mr. McCoach, for whom, on his own, was doing just fine without Agora. As far as I am concerned Masta Gumshoe, anything that come from Agora is immediately discarded. I owned Pediment 4 years ago at .60/share and wish I still owned Diluth. I have sold all for a company called PetroSun Inc.( PSUD). I am not selling this here because there are few reportings from these guys. However, next week, they will flip the switch on commercial algae to biodiesel production, an actual first. Wait and watch, do not buy this one until they report financials and or go onto the Toronto exchange. See their recent news and do your own homework. Thanks Gummy.jerry v ps. psud also has immense oil and gas lease holdings up to 2 million acres.

    [Reply]

    Posted by JERRY VERDUCCI | March 29, 2008, 1:49 pm

12. Any comments out there about Copper King Mining Corporation out of Milford, Utah? John O’Hurley (of Seinfeld, Dancing with the Stars, etc. fame) is spokesperson.

    [Reply]

    Posted by Buschman | May 9, 2008, 11:59 am

13. Got a teaser from McCoach about a North China
    Gold stock. (2.9 Mil. Oz.) selling at $2.48/ share.
    Any ideas?

    [Reply]

    Posted by Clumpner | May 10, 2008, 5:04 am

14. Clumper…
    I think that one is JINFF cusip# 47758×102
    Jinshan Gold Mines Inc

    [Reply]

    Posted by GigaBill | May 23, 2008, 7:02 am