“Boise Basin’s Gold Fire Sale — $25.17/ounce?”

By Travis Johnson, Stock Gumshoe, January 11, 2010

This ad was a very popular one over the weekend, it started pouring in through the Gumshoe email floodgates just a couple days ago, and it’s clear that we’re all once again excited about little junior gold mining companies … especially with gold getting over $1,150 per ounce once again.

So what’s the deal? The ad is from Luke Burgess for his Hard Money Millionaire newsletter — and he’s telling us that his pick goes up 6.4% for every 1% rise in the price of gold. And it is a ridiculously small stock, even for this fairly expensive newsletter (the newsletter is currently $495/year) — he tells us it has a market cap of just $11 million. Sounds like a rollercoaster ride might be ahead, let’s look at the clues and sniff out this stock, shall we?

The stock that’s being teased is working in the “Boise Basin,” one of the great ore zones during the gold rush days (the basin produced more gold than Alaska during the gold rush), and one of many prime gold mining areas that has been rejuvenated by high gold prices, with junior miners double-checking those old mines and looking to see if they missed anything — or if there’s something sexy and shiny underneath the old tunnels and pits. And yes, for the geographically challenged, it is in Idaho.

The clues are as sparse and thin as my hairline is becoming these days, so while I’m pretty sure I’ve got an answer I should let you know that there’s a (hopefully small) chance that I’m wrong. Here are the main clues I’m working with today, aside from the basics that it’s small and in Idaho …

“With over 600,000 ounces on the property, this $11 million company’s assets now exceed $690 million….”

“a recent battery of core tests – whose results haven’t even been released to the public – have already sent ripples of excitement through the precious metals investment community….”

“With a near-target production of 25,000 ounces per year, we’re looking at a potential earnings per share (EPS) of $0.14….”

“More than 55% of this company is held by insiders, institutions, and professional investors…”

“And all of the warrants out on this stock — that is, contractual agreements to buy at a certain price — are priced between 50 and 75 cents…”

and finally …

“In the closing days of 2009, this company sunk 6 drill holes into this piece of Idaho real estate.

“The core samples, which measured mineral content in the bedrock to a depth of up to 985 feet, represented a limited test…

“But in a subsequent press release, management said, “We are extremely pleased with the results…”

“Although the official numbers haven’t been published yet, the old adage ‘you can’t keep good news secret for long’ has proven true.

“In the 2 days that followed, the stock skyrocketed 25%, with the daily volume spiking to over 580% of its average over the previous three months…”

So in time-honored tradition, we carefully grind up those clues and throw them into the gravity-leach Thinkolator, and after a while the answer comes seeping out from the bottom … this looks to be:

Premium Exlploration (PEM in Canada, PMMEF on the pink sheets)

And yes, this stock is teeny — the market cap is still well under $50 million, and the shares are already spiking, probably thanks to the aggressive weekend of marketing by Hard Money Millionaire. Looks like the shares are up almost 25% already this morning as I type.

And the stock may well be about to get significantly more attention — they’re presenting at a junior mining conference next week, and at the Money Show in Florida in early February … so I don’t know that they’re primed to get lots of media attention as Burgess teases, but they’re likely to get at least a boost of short-term interest from investors. And with a stock this teensy, it doesn’t take much attention to drive the shares higher … of course, as with all tiny stocks, gravity tends to increase in strength as enthusiastic and impatient newcomers pour in through the gates, so the fact that the stock may well bump up thanks to this attention (including the attention here from yours truly) doesn’t mean the stock is necessarily going to stay higher. Most don’t, but the progress they’re making in analyzing drill results and updating their resources will let investors tell us one way or another how much the stock is really worth.

Why Premium Exploration? The drill program announcement came out on December 29 and matches perfectly — they drilled six holes in a fairly low-budget attempt to start updating their resources, they did indeed drill to a depth of 300 meters under previous holes (that rounds out to the 985 feet in the teaser), and the management quote teased above matches their press release. Here’s a longer quote from that same press release:

“We are extremely pleased with the results of this program and are eager to receive assays, due to the significant impact it could have on the Friday-Petsite gold resource. This phase of drilling included three of the deepest holes drilled on the property and intercepted the mineralized zone 300 meters down-dip from the bottom of historic drill hole PC010.”

The whole PR is here if you’re interested.

They are no longer an $11 million company, but that’s not too much of an exaggeration — and the warrants do have 50 and 75 cent strike amounts, though from a quick look it appears that the 50 cent window may have expired on at least some of those warrants, the warrants were extended a little bit and there are at least some warrants with rights priced at 75 cents until August of this year. They also did a private placement in November that included some warrants at 30 cents, so that doesn’t exactly match the tease … but with the drilling announcement being such a perfect match, and with the 25,000 ounce production target a good match as well (they’re targeting 25-35,000, according to the notes I’ve seen) I still think we’re safe to assume Burgess is teasing Premium Exploration.

In addition to exhibiting at those upcoming investor conferences, they’ve also been pretty actively covered by others in the junior miner investing punditry, including the Midas Letter and the Korelin Report and they link to some of that info from the company website (I know nothing about those sources).

Will it pan out? Well, I haven’t done much additional research on this one since I wanted to get my best answer out to you as quickly as I could — and those who have been around these parts for a while know I’m no expert in evaluating eensy beensy junior miners … but I know a lot of my readers are much more in tune with this sector, so hopefully they’ll chime in and let you know what they think, so feel free to throw out your assessment, opinion, analysis, question or smart remark in the comments box below.

And if you’re one of the early subscribers to Hard Money Millionaires, you could be the first to review it for your fellow investors — just click here to enter your review at Stock Gumshoe Reviews, thank you!

Related Gumshoe Articles

“Turn $4k into $107,280 with the Biggest Metals Investment of the 21st Century”

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25 Comments on "“Boise Basin’s Gold Fire Sale — $25.17/ounce?”"

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billl
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billl
January 11, 2010 12:25 pm

i was in touch with bureau of land mngt a while back they told me no further permits been issued area of that elk city project are protected you may want to do some DD on headwaters of the clearwater basin also google clean water act elk city before putting any skin in this over hyped play

ajetjock
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ajetjock
January 11, 2010 12:28 pm

Interesting. However I like the Jinshan (JINFF) story much better when it comes to gold.

bill
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bill
January 11, 2010 12:33 pm

homework on south fork clearwater basin is a great starting point

ajetjock
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ajetjock
January 11, 2010 12:40 pm

Interesting. When it comes to gold however, I prefer the Jinshan (JINFF) Canada-China story.

pcolajoe
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pcolajoe
January 11, 2010 12:55 pm

Thank you for all your great work, on this and on the Cox stocks. You have a great site.

Barry
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Barry
January 11, 2010 1:00 pm

How the heck do they calculate the gold price @ $25.17 when they haven’t even started yet?

To Billl: perhaps if they are redoing an old site no further or extra permitting is required. I dunno, just postulating.

Dave
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Dave
January 11, 2010 1:18 pm

That is the stock. And the confirmation is the fact it opened up today nearly $0.10 and is up right now over 27%. I had an order in and it was not filled. The claims are mostly patented so the work for permiting is much easier.

AGCZ is anther one getting a push right now and might be worth a look. Or better yet, look at GQMFN, EGFDF, GSS, TRXOF or NXG, all GSA reco’s under $4 (except EGFDF, which is $6.50).

Chris
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Chris
January 11, 2010 2:01 pm

@dave AGCZ is being pumped by stock promoters – Lebed.biz specifcially.

His disclaimer:
My firm Lebed Biz LLC has been compensated by a third-party (Wall Street Grand, LLC) $22,500 cash for a one-month AGCZ investor relations contract. Never invest into a stock we discuss unless you can afford to lose your entire investment. For our full disclaimer go to: http://www.lebed.biz/disclaimer.htm

Bruce Bardes
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January 11, 2010 5:34 pm

It’s comforting to know that the Mighty Thinkolator operates by the same chemical principle as some gold miners in Nevada use to extract gold from its ores. Leaching. Pile up the ore, and drip a cyanide solution through that heap. Cyanide complexing is just about the only way to dissolve gold out of its ores. Keep up the good work, Travis. I always enjoy reading your messages.

Peter
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Peter
January 11, 2010 8:28 pm

A nice safe Gold Stock that has been perfoming like a champ is RBY ….SUPER MONEY MAKER! YOU CAN SET A STOP ON RBY, AND IT IS LIQUID unlike the Pink Sheets and OTCBB stocks which are PUMPED by paid promoters who have only 3 people in mind ….ME , MYSELF, and I !

Jeff
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Jeff
January 11, 2010 8:31 pm

It’s still not too late to get on board the Gold Reserve Express. West Face Capital, Inc., a $7 Billion Toronto hedge fund, announced today that it has increased it’s ownership in Gold Reserve from 13.3 % to 14.4 %. And there is an even bigger hedge fund ($24 Billion) that is accumulating shares in Gold Reserve. By the way, Gold Reserve’s ticker symbol is GRZ.

Ayub
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Ayub
January 11, 2010 11:36 pm

Jeff, I looked into Gold Reserve Express (GRZ). Why would u want to put your money where it’s fighting Chavez in International arbitration? If they win and ruling comes into play, I’m betting Chavez wouldnt give a hoot. I smell trouble.

Jeff
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Jeff
January 12, 2010 10:15 am

I’m also betting that he wouldn’t give a hoot, but the world court has a history of seizing assets — in this case Venezuela’s oil revenues. If Gold Reserve were “only” to receive a judgment of $300 million (what Gold Reserve has invested to date in that country), it would only take about one week of Venezuela’s oil income to pay the judgment.

Michael Harris
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Michael Harris
January 14, 2010 2:35 am

I would bet on it if it has gsa contract. I think government involvement is an assurance that it wont be a bumpy ride.

Michael Bass
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Michael Bass
January 14, 2010 7:18 am

The only person I trust with my money is myself. So I don’t subscribe to any of these services. But PEM just released new high-grade drill results last night that are gaining attention this morning. We’ll see how Mr. Burgess’ pick plays out.

Bill Downey
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January 18, 2010 5:15 pm

PEM has a stock history of spike up in prices but no follow through. However, volume did pick up in 09 and the shares have doubled in a few weeks. There was a huge spike in vol –10 mil a few weeks ago. The 25 to 40 cent area would represent a nice pullback. This one needs to form a nice uptrend and more consistency. May you all prosper.

Nick Morley
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Nick Morley
January 19, 2010 3:46 pm

Thanks Travis,

You saved me a lot of money on this one. I was tempted to sign up for the details. Only as a UK resident I found that with the dealing arrangements I have, I wouldn’t be able to buy the stock !

Cheers,

Nick

bill
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bill
September 16, 2010 10:48 am

clearwater basin is protected under the clean water act

Dave
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Dave
January 12, 2010 10:39 am
Chris, I KNOW that but thanks for mentioning it. If you got in at 1.13, you have a nice profit right now; but you do have to watch carefully. It has also been listed by other newsletters following gold/silver stocks, therefore I should have mentioned the connection. I have been following LEBED for some time now (well over a year) and he has a very high percentage of winners. Here is the contents of a newsletter I got yesterday from Lebed: Great Panther Silver (TSX: GPR) hit a high today of $1.09 up 24% since I announced it as my… Read more »
Bruce
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Bruce
January 14, 2010 5:24 pm

The permits were preexisting from former explorer and have been kept current. Mine can be fast tracted which is the plan.

A Kim Lee
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A Kim Lee
January 14, 2010 10:49 pm

if Lebed were to put on the Mighty Thinkolator, the universe would collapse in on itself.

Tom
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Tom
January 18, 2010 5:03 am

Dave,
What is your newsletter or source of information?

stockcrazy10
Irregular
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stockcrazy10
January 18, 2010 1:42 pm

The ‘newsletter’ is free.

You can subscribe at http://lebed.biz/

Dave
Guest
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Dave
March 11, 2010 2:04 pm

The other source was Gold Stock Anaylst at about $1000/yr; the Lebed sheet is free.

Neil Campbell
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Neil Campbell
March 11, 2010 1:27 pm

I will second that!!!!!!
With the Chineese gov’t being 40% owner it probably has a good chance of expanding! New mine just coming online plus already making money!!!!

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