McCoach’s Best Idea: “Rupert’s Paradise Silver Mine”

By Travis Johnson, Stock Gumshoe, December 19, 2007

This one comes in from Greg McCoach, who edits the pretty popular Mining Speculator, and I’m always interested to hear about what he’s touting — especially since McCoach currently holds the top spot in the Gumshoe Spreadsheet with his pick of Duluth Mining. This pick is apparently for a new service of his, Insider Alert, that apparently tracks his personal picks and will run you $1,995 a year (that’s the special one-time offer rock bottom discount price, naturally — “retail” price $3,000).

So what have we got this time around?

This is purportedly a silver miner, though as we’ll find out that’s not necessarily the main output or focus of the mine.

It was developed in the early 1980s by a pair of brothers who tried to corner the silver market — “tucked away in a desolate area 860 miles away north of Vancouver, oddly enough called Rupert’s Paradise, [this mine] was all they needed.”

Those brothers, who we’ll mention again in a moment, spent the 1970s trying to corner the silver market, buying up silver and driving the price up to about $50 an ounce. When the government and the trading authorities intervened, silver plummeted to $5 an ounce. For those counting at home that’s a move from about $5 to $50 then back to $5 in the space of just a year or two. Ouch.

And, thanks to that, the mine stood there for years, 90-95% developed but never mined.

In the words of the ad, “Inside waited $3.5 billion worth (in 1980 currency) of easily extractable silver – and even more in zinc and iron … [and] There’s hardly another dime that needs to be invested before extraction can start.”

McCoach thinks the property is worth $10 billion and the company is capitalized at about $100 million. And he noted that he personally bought shares. How can you not start feeling the urge to subscribe and pick up a pile of shares when you hear that?

Well, subscribe if you like, but the Gumshoe’s going to help you figure out the name of this stock … so if that’s all you need, just keep readin’.

What other clues do we get about the name of this little company that’s supposed to make us all gazillionaires? (McCoach’s note speculates that your $10,000 investment could turn “suddenly” into $992,330.28 … I don’t know about you, but I’m itchin’ to get my hands on those 28 cents! )

Anyway, our clues:

70 million ounces of silver.
$4.2 billion worth of zinc
and $3.53 billion in lead

Infrastructure already in place, including a 1,000 ton/day mill.

And they’re “tucked away in a desolate area 860 miles away north of Vancouver.”

So … what are we dealing with here?

The Thinkolator 4000, following a minor software upgrade, tells us that this must be …

Canadian Zinc Corporation (CZN in Toronto, CZICF over the counter in the US)

Today’s share price of about .60 is actually on the downside of a dip in the chart — There was a spike up to .80, which I assume is when McCoach first recommended it a little while ago, but otherwise it’s been going gradually down in recent months. With 140 million fully diluted shares, that share price is just about right to get us a $100 million market cap.

And they do own the old Cadillac Exploration mine, which they bought many years ago — it’s now called the Prairie Creek Mine. That is indeed the mine that the Hunt Brothers (Nelson Bunker and William Herbert Hunt) built up during their campaign to corner the market in silver in the late 1970s/early 1980s. There’s plenty you can find out about them if you want to, even before they manufactured the silver bubble they were quite famous and among the richest families in the country, and you’ll probably hear them mentioned in any book or article about market manias and the history of major investor speculation.

Canadian Zinc is the former San Andreas Resources Corporation, which bought an option to the mine in 1991 or 1992 and has been working there ever since, slowed down only by lots of breaks to raise money and, I assume, a brief interlude when they changed their name. And it appears that many of those years were spent primarily drilling for diamonds, of all things.

That’s what drives me crazy about investing in mining companies — various entities have been spending money trying to get this thing off the ground (OK, out of the ground) for 40 years … and there is reportedly plenty of silver, zinc and lead in there, and maybe even some diamonds unless they were just drilling for fun, but they’ve yet to produce a single truckload. How can anyone rationally figure out a valuation on that?

So … it’s clear I’m no mining expert — I’m quite certain this is the mine, though it’s a bit further than 860 miles from Vancouver, more like 1100 miles … maybe the “desolate area” is the Northwest Territories itself, in which resides the mine, and it’s quite possible that it’s 860 miles to the BC/NT border. Didn’t check. Plus, then you have to do all that math with the kilometers and the miles and, phew, it’s getting too late.

But anyway, there’s only one Hunt brothers, they’re famous for trying to corner the silver market at the same time that they were trying to commission this mine, and this is indeed the company that currently has the rights to that same mine.

Now, before you jump up and get all hot and bothered and throw your money down, take a few minutes — if I were interested in investing in this one, these are the things I’d want to do to get started:

1) review their website and filings. They have a decent presentation that they gave a a conference in November, and their Sedar filings are quite clear. Understand what their timeline is, when they’re going to actually start mining, and what kind of money they’re going to need to invest in the mine, if any, before you see any earnings. I’d recommend also reading their own history of the mine to give you an idea of the kinds of things that have happened on this site.

and probably more importantly, 2) try to figure out exactly what they need to do to get their miners in the ground and working, and whether or not management can be relied upon to give you straight answers on this topic. This is another one of those companies that is “a signature away” — or maybe two or three signatures — from commencing operations. Permitting is crucial for these kinds of companies, especially since this one is dealing with First Nations issues (for American readers, that essentially means the need to negotiate native rights and land claims) that the Hunt brothers probably didn’t have to consider to the same degree … plus, they’re right next to a national park preserve (Nahanni), they’re going to need permits to extend roads, to use water, to sully the local environment to the extent that’s necessary, etc..

I’m sure they already have some of those permits in place, but as I started reading my eyes started glazing over. It’s your money, you can read up on this stuff if you’re interested.

So, as usual: The Gumshoe doesn’t know much about these little miners, or about how to evaluate them. I’ll stipulate that Greg McCoach is an expert on mining investment, but he also notes in the teaser, though maybe not in so many words, that he recommends stocks like these before they are safe investments, because he wants the ridiculous returns ($10,000 to a million bucks, remember?) — so take your time, remember that even if it sounds sexy this is still quite speculative … after all, it helped drive one of the richest families in America into bankruptcy a mere 25 years ago. What could it do to you?

And if you’ve any insight on Cadillac Exploration, the Hunt brothers, Canadian Zinc, or the Prairie Creek Mine, by all means, throw it on the pile!

Related Gumshoe Articles

“Billion-Dollar Mountain of Silver Trading for Under $1!” (McCoach)

Sniffing out "The Most Explosive Junior Silver Stock of 2012" teased by Greg McCoach's Mining Speculator

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18 Comments on "McCoach’s Best Idea: “Rupert’s Paradise Silver Mine”"

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Anonymous
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Anonymous
December 19, 2007 3:59 pm
This very well might be the mine that McCoach is touting, but it’s not from his Mining Speculator newsletter, which I subscribe to. He has been trying to get a new service off the ground, apparently all the companies that he personally invests in. Now why those companies are not in his Mining Speculator is a complete mystery to me. I’ve been a subscriber since March 1st 2007 and most of his picks are under water from that time.The only one of his current picks that is around .60 is Capital Gold (CGC.tsx or CGLD.otcbb)and the only pick that is… Read more »
bruno12
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bruno12
December 19, 2007 4:06 pm

I am sure the mine in question is Canadian Zinc. I have read up on it quite a bit. There is still a lot of opposition to permitting it. Canada seems to be making some mistakes lately towards miners (oil sands, royalty trusts,etc) so they may not permit this mine even though it would be an economic benefit. on the other hand, if you can wait 2-3 years, it could be a big winner.

StockGumshoe
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StockGumshoe
December 19, 2007 4:14 pm
Thanks for the comments — I did notice that this is for a new McCoach service that tracks his personal buys, but had assumed that he would be personally buying stocks that were already part of his Mining Speculator universe. Interesting that this is totally separate, and I would be surprised if it’s just a market cap consideration because from what I’ve heard many of the Mining Speculator plays are nearly this small. I suppose the fact that it’s not a Mining Speculator pick explains why it didn’t gap up much more significantly on his recommendation — since his new… Read more »
Anonymous
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Anonymous
December 19, 2007 6:27 pm

The symbol for Acadian on the otcbb is: ADAIF. The adglf was for the pink sheets.

Anonymous
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Anonymous
December 20, 2007 12:47 am
No Pain… Big Gain(s) By Jim NelsonDecember 19, 2007 One-and-a-half billion people suffer from pain annually, according to Rodman & Renshaw. The global pain market is at $40 billion per year. In the U.S. alone, there are 40 million physician office visits and $65 billion worth of lost work productivity because of pain. The industry is huge. But those numbers are only going up. The U.S.’ slice of that pie, which is currently $19 billion a year, is growing at a 15% annual rate. While there are hundreds of different kinds of pain and pain management therapies out there, only… Read more »
Anonymous
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Anonymous
December 20, 2007 12:49 am

Some of the risks involved with small cap miners aside from supply and demand of their product is internal,the cost of production,the amount of debt carried on their books,the amount of production per month,the ability to pay debts, and ultimately, net profit that equates into EPS. I notice none of the teasers discuss fundamentals.

Anonymous
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Anonymous
December 20, 2007 4:00 pm
I went to Canadian Zinc’s website to check out the company and see what they have for a mineral deposit. And that is all they have is a mineral deposit at this point. By that I mean they do not appear to have done enough work (drilling, undergound sampling, etc.) to move their resource estimates into the reserve category (a higher level of confidence in what they say or think they have is really present in the ground). Until they do that, they will not be able to produce a feasibility study which will define the economics of the project.… Read more »
duxx
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duxx
December 23, 2007 7:46 pm

As Nova Gold found out, even with lots of reserves the remote location can make it prohibitively expensive to develop the mine.

Anonymous
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Anonymous
December 27, 2007 6:21 pm

Nova Gold was not an extremely high grade ore deposit. They are going to drill a very deep hole to see if they can expand the deposit next year. They also have numerous other spots to explore along the belt. Their exit strategy is to be bought out by a large company. If they get the final permit this should sky rocket a year from now.

shamus
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shamus
February 11, 2008 11:54 am

Diamond drilling is not looking for diamonds, it is drilling for core deposits in hard rock that requires a diamond drill bit. It is necessary to produce a development plan for mining the deposit and very expensive. The assay numbers make this mine a worthy development project but it would be very helpful to know more about access(water or land).

Gravity Switch
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February 11, 2008 1:20 pm

Oops, sorry Shamus — you’re right, of course. Apologies for the oversight.

The site has been a high potential silver mine for at least 30 years — the question is, why hasn’t it been developed? Permits and access are the big deals as far as I can tell, and of course, cost if silver tanks again for any reason. Mining technicalities are clearly not my strong suit, but I do know that the timeframe for these kinds of developments is often at odds with the patience level of small investors who place bets on penny stocks.

Big G
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February 22, 2008 12:17 pm

If you look at Kiosaki he says silver is very very undervalued. 10 year supply and shrinking then eventual big money cycle. Been over 75 years since the great depression and the next mega K-cycle might have already started. When and if money becomes metal instead of paper again like historic past then these mines almost all of them accross the board will spike like the metals.

NBKid
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NBKid
February 22, 2008 10:33 pm

For those who are interested, the 52 to 60 cent area has PROVIDED the low in price the last 2 years. So, if you want on board, this is the price to buy it. It just recently dipped below 60, then right back above it. IT is about to move above the 50 day average…….if it does, the low may be in for the year. These type of stocks usually don’t take off until the end of bull runs, so do you own DD

Patrick
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Patrick
March 13, 2008 9:24 pm

I put down a few hundred bucks on this a month ago, no harm no foul.

Jordan Mcfeeley
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January 18, 2011 12:53 pm

I am really thankful to this topic because it really gives great information ;~.

Rasheeda Fresquez
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January 19, 2011 3:57 pm

I am very thankful to this topic because it really gives great information *.’

Mark
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Mark
February 19, 2011 8:32 pm

I put $7500 into this. Hope it works out. I heard it will to to $20 in a heartbeat after they get their permit sometime this year (between March and August, hopefully). They are ready to go.

martti
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martti
January 19, 2015 2:19 pm

if anyone still follows this, then CZN is planning to start production late 2016(Earl Hope),quite alot diamond drill results, must say quite awesome numbers too.
All Permits have been issued, including water and land to get the mine working and accessible.

if 25% of the numbers are true of the drill results, i am a happy camper once this thing hits full throttle 🙂

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