“… About to turn into a $10.1 Billion Gold Mine”

This ad caught the attention of a lot of Gumshoe readers over the weekend, which isn’t surprising — it’s filled with promise:

“One of the world’s top geologists makes an $80,000 bet…

“Now It’s About to Turn Into a $10.1 Billion Gold Mine

“And give you the rare opportunity to ‘buy’ gold for 17 cents on the dollar today – and make up to
11 times your money by December…”

Of course, we see promises like that every day here at Stock Gumshoe HQ — but that doesn’t mean we don’t start to imagine buying an island or a yacht when we see teasers like this … or, at least, a few more weeks of daycare for the Junior Gumshoes. So is it real?

Well, the newsletter is one I don’t think I’ve written about before — it’s apparently new, and called Global Resource Alert … edited by Peter Krauth, and published by the good folks at Money Map Press, one of a zillion Agora-affiliated publishers, if that means anything to you.

Let’s dig in a bit deeper … as with so many ads, they use a personal story to draw the picture for you:

“In November of 2004, a 44-year-old French Canadian with a crop of white hair (I’ll call him “T.R.”) purchased an abandoned gold mine from a bankrupt mining company.

“He paid the princely sum of $80,000 for the land and all the mineral rights it contained. “Princely” because his peers in the gold mining industry thought he was crazy to spend even a dime on it…

“The mine hadn’t produced an ounce of gold for over 20 years.

“And the owners of the property? They were thrilled at the prospect of making any kind of money from their useless land. Someone would have to be a fool, they said, throwing away good money on a dry rock hole.

“But this man was not your ‘average Joe.’

“T.R., it turns out, is now considered one of the top geologists on earth. He and his team have amassed a record of 10 major mining projects – more than almost anyone in the business.”

But the exciting part is the bit about their big gold reserves, which are in Quebec … and that’s where we start to get into some of the specifics. Or as I like to call them, “clues.”

“On November 25, 2008, to little fanfare, this tiny company recorded its scientific findings in an obscure government document.

“What they recorded set a new mark in the North American record books:

“The discovery of an astounding 8.43 million ounces of gold.

“And on June 2nd of this year – just 1,200 yards away from the original site…

“They confirmed the discovery of an additional 2.24 million ounces.

“Total deposits: 10.67 million ounces of gold.

“Total value of the deposits is a record setting $10.1 Billion.

“This renegade geologist and his ‘mom-and-pop’ company are now sitting on the largest undeveloped gold reserves in Canadian history…”

So … what else do we know about this stock?

It’s trading for about $7.

It’s a company based in Montreal.

The technical report on Osisko’s reserves, the NI 43-101 filing, reports, at least in part, 8.43 Moz of gold at .9 g/t out of about 286 million tons.

And of course, the ad lists dozens of other small gold miners that hit it big — without, of course, specifically claiming that our fair newsletter editor picked these miners before they had huge gains. Throw in a few examples of little miners whose share prices rocketed during the last gold peak almost 30 years ago, and an argument about “peak gold” and peak demand being fast upon us, and any investor would be filling his shoes with drool.

So what is the stock that will apparently bring us these riches?

Well, a reader threw a tip my way about this one … and I’m pretty sure he’s right. This looks to be Osisko (OSK in Toronto, OSKFF on the pink sheets).

The shares are just under C$7, (US$5.75) — they peaked about a month ago at a bit over US$6.50. They did buy a mine that others had given up on (the property went through a bankruptcy, I think), but which had been explored by Lac Minerals previously (before they were bought by Barrick) … and they did file their resource estimate on November 25 last year, which certainly helped the share price — you could have bought shares for just over a dollar right before the release, which coincided with the bottom for most of the market, and for gold stocks.

They did really buy the property for $80,000, starting back in 2004 — though they have acquired additional areas surrounding that first purchase, and the mine also carries a royalty to Barrick of 2-3%. Still, it does seem like quite a buy now. Robert Wares was running the show then — I don’t know him, but I don’t know all that much about mining in general … he was on the podium when Osisko won the “Prospector of the Year” award, and he does have a shock of white hair, from what I can tell from the photo, so I’ll consider that a match. I have no idea why they call him “T.R” in the teaser, if he is indeed the person they’re referring to.

The teaser here implies that these shares are about to benefit from the “first ounce bounce,” the jolt a miner’s shares often get when they actually start producing. I’ve also heard plenty of folks claim that they can time the movement of a stock by charting the peaks and valleys of the exploration cycle — a peak when the gold is discovered, then a long slide down while they quietly explore, then another peak after they file their official resource estimates, then another glide down when everyone realizes it will take years to start mining, then another peak when the mining begins and they start making money. It obviously doesn’t always happen according to this pattern, and mining is a risky and unpredictable business, even with those resource estimates being officially approved by third-party experts, so anything can happen while we wait for the ore to be dug up.

Osisko actually looks like they’re pretty close to putting an operating mine in place — they’re relocating buildings and doing community investment to make the local people happy, and the permits seem to be pretty well done according to their presentations (Quebec is, I’m told, a very mining-friendly place, and this mine is near many others). Their most recent corporate presentation, from February (it’s worth a look, you can see it here), notes that pre-stripping of the mine is expected late this year, and commercial production in Spring 2011, with a mine life, according to reserves identified so far, of ten years.

Osisko seems to have plenty of money to keep developing the project, which they call the Canadian Malartic mine — they did a big cash raise this year, timing it nicely for a buoyant gold price, and as long as gold remains near these historically high levels I don’t imagine they’ll have any trouble raising more money if and when they need it. Of course, if gold drops these shares will, too — as you can see from the softness in the share price during the last few weeks of weakening gold prices.

Will this turn you into a millionaire? Well, that’s anyone’s guess — it looks promising as far as I’ve gotten, but I’m far from a mining expert and there are almost always bumps along the way. What do you think of Osisko, or do you have other favorite little gold miners? Let us know with a comment below. Thanks!

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Share Your Thoughts

ShowHide Comments (40)
    1. Dave Van de Walle
      Jul 6 2009, 11:45:11 am

      Maybe they call him TR because of “Teddy Roosevelt” style qualities — not because of his actual initials?

      Great post, BTW. Love the stuff!



    2. GABOY
      Jul 6 2009, 11:50:18 am

      I agrees, I bought a few weeks ago and when I did the research, I found the company was solid and mid range at $6.90. If you go to their website, info is there. Good call Travis.

    3. vaag
      Jul 6 2009, 12:09:43 pm

      I’ve always liked the definition of a gold prospector: A liar standing next to a hole in the ground. But, sometimes????

    4. AlanH
      Jul 6 2009, 12:27:59 pm

      Going off script for a mo….. whats all this stuff about you guys celebrating Independance Day and letting off fireworks ? Surely it should be us Brit’s celebrating getting out of stock symbol USA before your $trillions of IOU notes came due. Pour me another glass and lets toast our Blighty’s good luck’ Good bye suckers


      Ps: only joking. If you ever want to come back, Im sure we can find a few Redcoats to take control of the Fed. Tee Hee!!

    5. SageNot
      Jul 6 2009, 12:39:16 pm


      Both TA styles indicate the current weakness of OSKFF.pk

      OSISKO MINING CORP (NASDAQ:OSKFF) Weak Downtrend Up Arrow
      Smart Scan Chart Analysis shows that negative longer term is strengthening. The market action could signal the start of a major trend change Weak Downtrend Very tight money management stops.

      Based on a pre-defined weighted trend formula for chart analysis, OSKFF scored -70 on a scale from -100 (strong downtrend) to +100 (strong uptrend):

      -10 Last Hour Close Below 5 hour Moving Average
      -15 New 3 Day Low on Tuesday
      -20 Last Price Below 20 Day Moving Average
      -25 New 3 Week Low, Week Ending June 20th
      +30 New 3 Month High in June
      -70 Total Score

      Open High Low OSKFF Price Change
      5.8044 5.8276 5.7228 5.7228 -0.2272
      Streaming Chart SmartScan Download Data Streaming Chart

    6. AlanH
      Jul 6 2009, 02:04:53 pm

      Sagenot (and your name says it all) Are you aware that your transient heads of state costs a great deal more p.a. than our very long term, budget Royalty. Anyway, the Queen is a great tourist attraction. Remember, a bird in the palace is worth two of the Bush’s, a Nixon, and quite a few other unmemorables since you arrived late into WW2, and quite possibly an Obama (although I like the look of that guy somehow…. (no Im not gay and anyway, he’s married)). At least She mostly keeps her trap shut.Politians come and go but our fab Queen stays contendedly in her gilded cage. I’d also take a look at your stereotype of our House of Lords. Mostly it now consists of the proven great and good who have the title ‘Lords’ like you have Senators. Ours have given up their powdered wigs….Do yours still wear toga’s?

      Tee Hee


    7. AlanH
      Jul 6 2009, 03:14:51 pm

      Now for something completely different…. I NEED HELP!!

      Im UK based and all the stock action seems to be US based. I trade US via my bank at £18 per trade(and there’s little obvious choice) . In US, trades appear to be circa $10 per trade, ie a $1000 trade = $10 in and out as opposed to UK, $28.80 in AND out. So it cost me $57.60 in and out to play ie the stock needs to move 5.76% up before I make a penny. Now we all know that, an average, 5.76 % move up overall in your portfolio is exceptional (other than penny stocks which can easily go down 6%).

      Any suggestions other than to forget the market and bet horses???


    8. DaveH
      Jul 6 2009, 04:19:57 pm

      AlanH – my suggestion is to move to the US. We can use more legals with money to help pay for the mess being made in Washington DC.


    9. GipsyKing
      Jul 6 2009, 06:36:22 pm

      Difficult to understand , at least I know what I am talking about.
      Quote:” That sounds to me like a statement of greed from someone who cares only of their own welfare. This is usually associated with the young who have not had the benefit of lifes many ups and downs. There are many things more important than money and self indulgance. We are all eventually responsible to others for our actions. My experiences tell me that ,in the long term, society in general will be better off if China does not get control of the worlds rare earths and as shareholders in LYC we will also be better off. Is the 1981 a clue to your age?”
      Good Night and Good Morning ,
      It’s a small world.

    10. oldasiahand
      Jul 7 2009, 09:13:15 am

      AlanH: have you tried tdwaterhouse.co.uk or etrade.co.uk

      I’m sure both charge a lot less than $28 a trade for N American securities. TDW charges $9.99 in the US and I think £9.99 in the UK.
      It’s higher but not as high. They will not let you open an account in the US without a social security number, which I just happen to have.

    11. SageNot
      Jul 7 2009, 12:50:08 pm

      See what you’ve started Alan, Travis probably wishes that I let your comment slide.

      NOT going to happen, I’m too proud a patriot, & the Tea Party I attended on Saturday never mentioned England or the Queen, they aren’t our problem just like the USA isn’t your problem Alan.

      The Financial Times comes to my door almost daily, & you don’t have t/b a genius to understand why the British are in the shape that they are; but I love that Bollywood picture on P. 15, with an Indian “looker” sitting facing the motorcycle driver they are using for a prop. For some reason all the gals here in the USA ride behind their drivers, they don’t know what they’re missing, eh what?

    12. AlanH
      Jul 7 2009, 05:33:14 pm

      I didnt understand a word of that. But as ‘Tee Hee’ implied, mates can take the pee; But we will still be mates once we’ve sobbered up.

      Pour me another one and I’ll insult your muvver in law next time. You may have left the room to take a pee 200 years ago, but you can always rejoin the party like it was yesterday brother.
      Luv Ya !

      Hang loose


    13. AlanH
      Jul 7 2009, 06:05:45 pm

      Whooooh! Back up stupid Alan.

      Not a Sage, Ive just re-read yours and realised I’ve missed something important. I used to read our daily papers/listen to the BBC. Recently Ive listened to the World Service which puts our local parochial news into a much wider perspective.
      You say that you read the FT most days and its obvious why GB plc has probs. Please comment cause its not obvious to me. Its v difficult for those provided with just tunnel vision to see the bigger picture. Your non partisan perspective could change everything. I’ll do the same for you if it helps.


    14. ponce
      Jul 13 2009, 04:38:12 am

      I could not get excited yet on OSISKO. It is over valued compared to large producing mines in China. Sino gold operates in China’s largest gold deposit area. Shares hover around $4. Jinshan is mining in China’s second largest gold area. Share is about $1. These are producers. Buying OSISKO is playing poker betting on a come. It is still a long way to producing. To construct the mining infrastructure is capital intensive and with tight credit today it would be an uphill move for them. Good luck to buyers at this time.

    15. Bruce
      Jul 24 2009, 04:29:03 pm

      Well folks, if you have read anything on the new US healthcare bill get ready to have your bank accounts, investment accounts, and anything related to gold become Obama’s.
      Who knows? We may have our own king real soon. Long live king obama.
      I think I’m gonna invest in a bottle of good scotch and forget about it.

    16. mike
      Jul 25 2009, 09:22:32 pm

      Why buy this stock when you can buy a proven company with an attractive p/e and small divy in Yamana gold for a little bit more?

    17. Tom T
      Jul 30 2009, 04:41:47 pm

      Looking at OSK.T as an overhyped story stock. Consider 10.1Mozs is still in the ground and might bring $150-250/oz in a takeover. Currently the market cap @ $1.7B / 10.Moz = $170/oz.= fair value. worrysome to see $0.17/oz in the writeup.
      The size(10M oz) makes it very attractive to the majors, but this is not a high grade deposit, so future costs /oz will be not be as low as others. With “first ounce bounce” scheduled for spring 2011, I would expect there is time for OSK to see a more attractive price in the interim.

    18. Eric Dumas
      Aug 21 2009, 11:46:49 pm

      Travis, you are right. Currently, Quebec is the most mining friendly jurisdiciton in the world.

      As a matter of fact, they bend over backward.

      They reimburse you with a govt. cheque for 50% of your exploration costs.

      Try to get such a cheque in Mexico.
      Labor and tortillas are not as cheap as in Mexico though.

      However, they also created high-school and college program along with the mining industry.

      They have VERY experienced minors there and they figured out a while ago that mining is very cyclical so if they made it friendly, many companies would invest their pesos there. Dudes like Agnico Eagle and other got the picture.

    19. mr. verdi
      Aug 23 2009, 01:47:07 am

      I am very long on ICN.AX . Verify for yourself. Just read their news and see their growth. The Aussie dollar keeps goin up against our fiat currency. This thing will double before Christmas and triple by spring easy. They are sitting on a mountain of CBM. When their new wells do what the last ones did, began emitting gas the first day of dewatering, then touting 5-7 trillion cu’ft of gas recoverable(only worth billions) then this puppy will really fly. Check out the chart, its so damned predictable is a laugher. Also, can’t wait for ‘ think or swim’ to get to Ameritrade

    20. Boneafide
      Nov 30 2009, 09:00:38 pm

      Timmins Gold TMM(TSX) may be a better bet in the short-medium term than Osisko because permits, equipment, facilities, staff are all in place. Trading around CAD 1.20, its heading for first pour by end of 2009 and commercial production 1Qtr 2010 in Mexico. Its touted to go to CAD 2.25 by Cannacord Capital.

    21. Sally Kilcullen
      Apr 18 2010, 06:13:34 am

      I think there is more upside with Clifton Star Resources and it’s sites very attractive. Osisko provided some financial backing for partial ownership – see the website for Clifton Star Resources; it has been covered by of the Investment Newsletters and institutional investors as well – NOT as many shares outstanding either. Very attractive with very experienced Sr. Geologist\ – CFMSF…check out the articles

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