“Tiny Gold Stock Declares First Ever Special Cash Dividend”

By Travis Johnson, Stock Gumshoe, August 11, 2010

If the last few years of Stock Gumshoe-ing have taught me anything, it’s that many of my readers love gold, and many more of them love dividends. So when the folks at Lombardi issued this email blast promoting Inya Ivkovic’s Explosive Mine Stocks newsletter, it caught my eye — they tease us that you can receive your special report about this company as soon as you subscribe (“on sale” for $89), and that this stock is not only primed to issue its “first ever special cash dividend,” but also has three other catalysts.

So … the “deadline” is August 16 (that’s apparently the day you have to be a shareholder of record in order to get this “special dividend”), so they even manage to squeeze a little urgency into their newsletter pitch. That gives us five days to figure out what stock this is, so I think we’re OK. I may blather on, but not for quite that long.

Part of the hook for this pitch is that the “Wall Street fatcats” are on vacation and missing the hot story …

“Over the last 30-45 days, it seems a tiny gold stock has quietly been making a series of very important announcements and financial moves.

“But here’s the thing…

“Because many Wall Street traders and fat cats typically take the summer off and because trading volume plummets, these moves have gone practically unnoticed.”

So are we about to be rewarded for sitting patiently at our desks, toiling away while everyone else is in the Hamptons? Sounds pretty enticing, no?

Here’s some more from Michael Lombardi’s letter:

“I’ll admit, it’s not a ‘sure thing’… nothing is… but if you’ve got a little cash set aside for just the right opportunity… then this stock may be the one you’ve been waiting for.

“So very quickly, if you are interested, here’s what’s going on and how you can take advantage before the August 16th deadline.

“Basically…

“There are four recently announced ‘triggers’ that could send this stock price soaring once Wall Street roars back to life later this month.”

Thankfully, the newsletter copywriters know that we’re all so accustomed to disclaimers like “it’s not a sure thing” that we know in our greedy little hearts that what the analyst wanted to say was, “guaranteed winner buy buy buy!” … and it was just the mean lawyers keeping him back.

So … we know that the dividend deadline is August 16, which is probably enough if we’re really willing to put the Thinkolator through its paces … but it’s a steamy, lazy summer day, so let’s see if we can’t make it a bit easier on ourselves by sifting through a few more clues. Starting with those four catalysts that Lombardi mentions …

“Gold Stock Explosion Trigger #1 – Pulling Real Gold Out of the Ground

“On July 1st, this tiny company declared commercial production….

“… they are pulling gold out of the ground at a cost of only $200 an ounce….

“… they are expected to pull out 70,000 ounces in the next 12 months.”

Lovely! How about another trigger/catalyst?

“Gold Stock Explosion Trigger #2 – Approval to Apply for NYSE AMEX Listing

“On July 8th, this tiny company got serious about their business and filed for a listing on the NYSE Amex… a considerable step up from the over-the-counter listing they’ve had up to this point.”

Better and better … more?

“Gold Stock Explosion Trigger #3 – $600-per-Year Research Service Initiates Coverage

“On July 21st, this tiny company was picked up on the radar of a small independent research firm… coverage was initiated.

“This firm charges investors and institutions $600 per year for their ‘coverage.'”

And finally, that “special dividend” …

“Gold Stock Explosion Trigger #4 – First Ever Special Cash Dividend

“On July 29th, the company declared it’s first ever special cash dividend…

“That’s a rarity among gold stocks and should attract quite a bit of attention on Wall Street.

“Think about it… as an early investor, you could actually be a stockholder of record if you act before the markets close on Monday, August 16th, 2010.

“The dividend isn’t much, but the company’s CEO says: ‘Though there are no guarantees as to future dividends, we remain steadfast on our longstanding goal to return approximately one-third cash flow generated from operations back to shareholders.'”

Hmmph. Well, I don’t know if you saw it buried in that text above, but this is the first time we’re told that “the dividend isn’t much.” That’s a harsh return to reality for an ad that got our attention in part because of that “special” dividend (a special dividend just means one that isn’t part of a regular and expected dividend payment schedule, but in investors minds they typically stand out when they’re large — and this one ain’t).

So now I can tell you who this is, eh? The gold miner they’re teasing is Gold Resource Corporation (trades over the counter at GORO, though they have applied for an AMEX listing — it also trades in Frankfurt at GIH)

And yes, the “special dividend” may be important as an indicator of their future intentions, and as a flag to draw the attention of investors, but it is absolutely teensy — this is a $14 stock, and the special dividend is three cents, (a “yield” of one fifth of one percent). So if you rush to get in before the ex-dividend date, you’re being a little silly.

Of course, there may be other reasons to buy the stock — the CEO did essentially commit to a 1/3 “shareholder return” policy, which would typically mean either share buybacks or dividends. I don’t know that I’ve ever heard of a mining stock buying back shares, so I’d bet on the dividends … but still, we’re talking about a small stock that just began gold production, so the dividend, while nice and a great indicator of shareholder-friendly management policies, is unlikely to be much of an income producer anytime soon.

The other “stock explosion triggers” are all real events, too — they did get “approved to apply” for an AMEX listing in early July, though the listing itself hasn’t been approved and I have no idea of whether or when it may be.

And they did declare that they had begun commercial production in their first mine on July 1, and that their production will be at extraordinarily low cost — here’s how they put it in a recent press release:

“Gold Resource Corporation announced Commercial Production July 1, 2010 from its El Aguila Project’s high-grade open pit deposit. The Company targets 70,000 ounces of gold over the next 12 months at approximately $200 cash cost per ounce from its El Aguila mill’s flotation circuit. The Company’s aggressive growth curve targets production ramp up by year 3 to 200,000 ounces of gold equivalent (gold and silver) at $0 cash cost per ounce using industry standard base metal byproduct credits.”

And if you want the company’s pitch from the horse’s mouth, they have a pretty aggressive corporate presentation on their website, including the goal of producing 200,000 ounces of gold (well, gold equivalent — actually about half gold/half silver). They say that this goal, with their assumptions, could allow them to pay a dividend of about $1.20/year (assuming they continue to pay out a third of their cash flow, which they say they will).

Gold Resource Corp.’s projects are all based in Oaxaca, Mexico, in historical mining districts. Their first project is El Aguila, which includes an open pit mine (mostly mined already, and the source of that first 70,000 ounces) as well as an underground mine (called Arista) that they’ve just started to build. It looks like the underground mine will be the source of most of that 200,000 ounces per year going forward, and they’re forecasting to have a mine life of 8 or 9 years at that production level.

This site has the processing plant that they would also use for other potential mines in the area, though those mines are very much in the early exploratory phase as of yet (they’ve done a few drill samples at one more potentially high grade site, El Rey, but it sounds like there’s still a lot to do … the other three sites they’re currently targeting have yet to see much exploration, and are primarily silver with some “gold credits”).

So … an interesting gold miner, at least, and it looks like they do have some relatively small high-grade mines on tap, along with some very active self-promotion. I do like the focus on cash flow and dividends, which is quite rare for small miners, though it’s always a little off-putting to see miners who aren’t listed in Canada and therefore don’t file those familiar-looking NI 53-101 resource reports with proven and probable reserves — their materials are all about cash flow and annual production expectations, not about reserves. They certainly aren’t unknown, with a fairly prominent mining partner and institutional investor (Hochschild Mining) and a solid market cap of almost $700 million after a dramatic stock increase in the past year from $4 to $14.

There are, you will not be surprised to hear, many Stock Gumshoe readers who know far, far more about mining than I do — if any of you would like to share your opinion on this gold miner, let us know with a comment below. I have barely heard of Inya Ivkovic, though she also edits a biotech newsletter and a microcap newsletter for Lombardi, but if you’ve been a subscriber to her Explosive Mine Stocks letter please share your thoughts with a brief review by clicking here.

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30 Comments on "“Tiny Gold Stock Declares First Ever Special Cash Dividend”"

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Richard Whisler
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August 11, 2010 1:51 pm

Hey Travis, What's going on with AMOK, and do you take Paypal yet? Ric

Myron Martin
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Myron Martin
August 11, 2010 2:40 pm
Travis: My initial reaction is that is a very high price to pay for a not well known miner just initiating production. I have heard of the company before and had it on my list of companies to research when i can find a "round tuit" but it seems to me a rather rich evaluation compared to established and well known producers like Yamada or IAM Gold or half a doxen others still under or right around $10. Of curse on the other hand there is Osisko that I bought under 46.00 and is now approaching $14. but based on… Read more »
Myron Martin
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Myron Martin
August 11, 2010 2:47 pm

Just noticed that the $ sign I intended posted as 4 instead, paid UNDER $6. for Osisko, and by the way, these penny stock promoters have some enticing ads, I have read the AMOK promotion many times and agree with travis, these "blue sky " promises are based on nothing but a clever copywriters vivid imagination.

Jay C
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Jay C
August 11, 2010 11:56 pm
The AMOK saga seems reminescent of the feverish sales pitch that accompanied American Sierrs (AMNP) some time last year. As it turned out, only a few months before the salacious teaser, AMNP was a Seattle based company icalled CE Emtertainment specialising in (wait fir it!) Ukranian musical instruments. The company "upped sticks" to Ren, renamed itself American Sierra and claimed it had gold prospects. The company had not filed financial statements for several months & it transpired that they had no employees drawing a salary & no revenues. The stock sailed to around 1 buck 30 cents on the back… Read more »
mary miller
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August 12, 2010 10:59 pm

moneymorning is hiding the name of small mining company in australia that’slisted on stockexchange at 71c that has mining right to rare earth

PETER HOLT
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PETER HOLT
August 13, 2010 1:21 pm

TRY LOOKING At BGM JUST GONE IN PRODUCTION @ 525 AN OZ IN BC 500000OZ IN 1ST YEAR NO DEPT 70MIL SHARES OUT TRADING AT 80C AND A 25 MIL TAX HOLIDAY HAS TO BE A BUY

Hulk
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Hulk
August 14, 2010 5:16 am

Gold Resource Corp is the ebst gold company i have ever seen. the potential is far, far exceeding taht of Rubicon or San Gold at Red lake. GRC will have some 10-20 m oz one day. They have a 29 oz grab sample that is perhaps part of a vein!! imagine that! They are going to $100. if all goes as plannned

roscoe
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roscoe
August 14, 2010 11:57 pm

how fcome nobody is talking about the heavy hitters that bought into pmmef?

Don
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Don
August 15, 2010 2:48 pm
GRC will likely produce loads more than 200 000oz.. It will take a year or two to double these resorces, but once this is done, so will the increase in production. La Arista is most likely double the current size AND two new veins have been found close nearby. Now imagine that being 4 times the current 8 year mine life. .. You do the math! This is a billion dolar company in the making. Multi billion dollar company. The silver sambles are in 10 000oz. In a year or two, people will ask themselves why they did not buy… Read more »
hulk
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hulk
August 16, 2010 8:18 am

Regarding Rold Resource Corp

It is the best gold mining stock I have ever seen. The casflow will be magnificent. Sure it is expensive. However, they have drill something like 3 of +20 targets. The resource will be beteween 10-20 M oz one day. They have a 2,5m grab samble of 29 oz gold that is looking to be part of an entire vein!!!!! Now, you don’t have to be genius tio figure out that thay are going to $100 if that is true.

they have only started to scratch the surface yet.

roscoe
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roscoe
October 16, 2010 8:26 pm

Looking at GORO as an early opportunity to buy into a "blue chip" one can not help but wonder if Mexico will not take a large piiece of the fufure production in extraction taxes, income taxes, dividend taxes, etc, does anyone know how big those pieces will be under Mexican law?

markvictor111
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November 9, 2010 4:55 pm

•This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.
**********

markvictor111

Gold Prices

Richard
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Richard
November 17, 2010 2:14 pm

GORO is now actually listed on AMEX.
On their website they say that 1/3 will be paid for taxes etc, 1/3 for further exploration and 1/3 for dividends.
If you bought GORO for 6 Dollars in August 2009 when it was teased the first time, then 12 months of 0.03 Dollars = 0.36 Dollars of actual “special” dividends are 6% yield which is really exceptional for a gold miner.

coni
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coni
December 14, 2010 11:53 am

any thoughts on a company named Reservior Capital Corp from Canada – they recently signed contracts in Serbia to mine the "King's gold" along the Serbian/Montenegerian border in Borderova…

Myron Martin
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Myron Martin
December 14, 2010 5:03 pm
With some chagrin I read what I wrote back in Aug about Goro and wish now I had not been so sceptical and had taken the time to check it out thoroughly. While I was not particularly impressed by Explosive Mine Stocks and actually CANCELLED my subscription after a couple of issues because GORO was one of the very few they recommended that I did not know about and my track record of precious metals stock picks was far better than theirs, the fact is that this is one they GOT RIGHT, BIG TIME> When I actually took the trouble… Read more »
RAEZOR
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RAEZOR
April 7, 2011 4:12 pm

BEWARE!!!!

I Just got a Lombardi email today (4-7-11) exactly like this but the key buy date is April 15, 2011!!! Some of the wording and the 3rd trigger are different, but all these rare, magical stars are aligning again so soon for some other "Tiny Miner" – yeah right! A bunch of BS.

I actually was investigating it when I found this thread, almost thought it was Extorre…

THANX for this post and the time and money saved.

bill
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bill
April 9, 2011 12:50 am

seen goro ceo on cnbc awhile back he sure came across as a A$$

Hose Himenez
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Hose Himenez
April 9, 2011 8:17 am

try gbg…it will double

Jim
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Jim
April 9, 2011 9:53 am

If you want a good play in the mining sector. I recommend SNDXF and STTYF. Both are ran by former Silver Wheaton execs.And very cheap.

Brian
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Brian
April 10, 2011 9:41 pm

The sleeper of the year TWDIF…

len cooper
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len cooper
December 13, 2012 12:10 am

I noticed you are still taking money out of my visa account . I asked you to unsubscribe me many months ago. I have NEVER recieved any of your newsletters , due to the complicated things I have to do to receive it . – – – PLEASE, stop stealing my money and unsubscribe me from your “Resource milionaire” newsletter that I never received . This is my second request. – – – – – – Thank you , len cooper – – (redlen02@gmail.com)

Gravity Switch
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August 12, 2010 10:36 pm

Sounds very likely to be Lynas, though there are a few other rare earth'ers in Australia as well — Lynas is far ahead in terms of actual production and near 71 cents.

Hulk
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Hulk
August 14, 2010 5:17 am

sorry for my porr spelling

Jeff
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Jeff
August 15, 2010 5:39 pm

Maybe no one is talking about the heavy hitters that bought into PMMEF because no one knows about the heavy hitters who bought into PMMEF. Why don’t you tell us, as you are hinting that you know?

roscoe
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roscoe
August 15, 2010 10:21 pm

I know only what I read in pmmef releases as posted on big charts when you bring up pmmef. Ten million committment by what appears to be a canadian company. Extensive drilling and big time claims of a deposit yet it is a rare day when $10,000 changes hands in the stock. Anyone know what gives?
Roscoe

JR Webster
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JR Webster
August 26, 2010 11:28 pm

Hey, I have cool-aid to sell at $89/oz…..oh never mind, you are already sipping it!

archivesDave
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archivesDave
December 20, 2010 5:37 am

Myron,
Thanx for some very astute and sage advice!!!!

archivesDave

Pete P
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Pete P
April 8, 2011 5:18 pm

Jay C. – AMNP closed the mine in North Western California and went to Canada. An employee was killed while working in the mine and it never opened again. I think they were close to production if I remember right. Shares obviously dive bombed, today close 0.049. They are now supposed to be an explorer some where in Canada. This was the story I remember from a news letter about them I think first of this year or last of last year. I still have this dead one, doubt it will make it back.

dlst
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dlst
April 8, 2011 10:59 pm

Prescient, Don. Here we are in April 2011, and the share price is up to $29 and it's a $1.43B company. Wish I'd bought 33 weeks ago…..

Mark
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Mark
April 12, 2011 5:53 pm

Lynas has been good to me (from 2 to 2.80), but of course very speculative. It is, as you say, far ahead. The others are too many years out of production to trust. Lynas has customers on board for later this year to buy first production.

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