“Tiny Gold Stocks About to Soar?” Matt Badiali

By Travis Johnson, Stock Gumshoe, November 10, 2009

A large number of readers have sent in copies of the latest tease for Matt Badiali’s gold stock picks — Matt is the editor of the S&A Resource Report, a pretty popular but inexpensive (and therefore large) oil and commodities newsletter, but this time he’s sharing his picks only with the subscribers of Phase 1 Investor, Stansberry’s far more exclusive/expensive letter, with the argument that he can’t pick such tiny stocks for his larger readership without clobbering the shares.

Makes sense, we’ve all seen these kinds of tiny mining stocks go crazy from time to time — but I imagine this might be frustrating both for Badiali’s regular subscribers (who don’t want to pony up an extra couple thousand bucks to get more of his picks), and perhaps even for the regular subscribers of Phase 1 Investor, who signed up for a letter that bills itself as primarily an advisory on small biotech stocks. This isn’t necessarily out of character, however — I have been covering Phase 1 teasers for a few years, and several of them have focused on non-biotech stocks … this is their big upgrade newsletter that they go to whenever they have an idea that’s too speculative (or, one might argue, too “good”) to be shared with the hoi polloi who subscribe to their less expensive letters, and many of the major publishers follow this same strategy, impressing you with their cheaper letters and asking you often (depending on the publisher, this might be every, oh, ten minutes or so) to upgrade and get the good stuff.

And of course, when they tease these little stocks for the fancy pants newsletters, they get a bit chary with the clues — so I probably can’t identify all three of the gold stocks Badiali is teasing today (if only you knew how much it pains your friendly neighborhood Gumshoe to say that!), but so many folks have been asking about this one that I thought I should at least give it a look.

So what do we learn?

The bulk of the ad is an argument that there’s a second (and sometimes third or fourth) stage to profits for gold miners — their shares get a big jump when they make their first discovery, and then jump higher and higher still after that discovery is confirmed with technical reports. That’s not so different from arguments made by others in the past, including John Doody for his Gold Stock Analyst, who looks at stocks after they’ve filed their NI 43-101 technical reports (that’s the regulatory filing in Canada for third-party analysis of mining resources and feasibility studies, and a great many of the small miners do trade in Canada). So, not shocking, perhaps — look at the stocks that have announced discoveries, track them for a while, and buy them before they release “confirming” data for the site that either leads to more reliable reserves numbers, or a larger potential resource, or some other good news.

Easier said than done, of course, and you’d have to pay a lot of attention to notice which of the thousands of teensy tiny gold stocks make potentially interesting discoveries — which is part of Badiali’s argument regarding why you should sign on to get his research.

So here’s the tease we get for these three tiny gold stocks:

“3 tiny gold stocks about to soar

Whenever Rob hears about a great opportunity outside of his expertise, he brings in the best experts on the subject… and shares their ideas with his readers.

Which is exactly the case this month with the tiny gold companies.

As I said earlier, Rob heard about these companies – and how to get in on huge discoveries AFTER they’ve made a big discovery – from S&A colleague Matt Badiali.

Here are the details…

“Company #1 – This tiny gold stock recently made a huge discovery in Nevada. The discovery holds more than 450,000 inferred ounces of gold so far, with lots of work to do. So far, that’s a project value of more than $463 MILLION – MORE THAN 4-TIMES the value of the tiny company. Matt expects a confirmation in the next 1 to 2 months.

“Company #2 – This tiny company recently made a significant gold strike in Canada. It already has more than 2 million ounces of gold resources identified, with more than 1.4 million ounces classified as “inferred” resource. At today’s gold prices this deposit could be worth more than $4.1 BILLION – that’s more than 35-times the value of the company. Matt expects a confirmation of this deposit in the next 30-60 days.

“Company #3 – This company is the smallest of the three, and therefore the one with the most upside potential. It has a huge gold discovery in Canada, an estimated 250,000-ounce deposit, which is about 4-times the value of the company. But here’s the thing. According to Matt, who’s talked extensively with the CEO, the company expects to eventually find more than a million ounces of gold. We’ll know more when a confirmation report is released which Matt says should happen in the next few weeks.”

Oooof … as I expected, the copywriters aren’t giving me a lot to work with here.

But I can make at least one guess to get us going — for the first one, Company #1. I think this might be …

AuEx Ventures (XAU in Toronto, AUXVF on the pink sheets)

AuEx is actually a very interesting little company, whether or not it’s the one Badiali is actually recommending here. It does match the clues, their market cap is right around C$120 million (depending on how you calculate the outstanding shares — that doesn’t include the options and warrants), which is roughly one fourth of US$463 million, and their big discovery, which had it’s first NI 43-101 release back in March, is in Nevada and does have “more than 450,000 inferred ounces” of gold. They’re also drilling now to extend and define the resource, so they may well have more news in the next couple months (the drilling “season” apparently ends around the end of the year, according to my reading of their announcements).

If this is the stock Badiali’s pushing as “Company #1” it’s not the $1 stock that he teases could go up 500% — I’ll assume that’s the third one, since he notes that the third one is the smallest and has the most upside potential. But I haven’t been able to figure that one out at all just yet, nor Company #2, so I’m happy to take suggestions from the great Gumshoe universe.

AuEx’s property in Nevada that’s at the top of their list for exploration right now is Long Canyon, which is partnered with Fronteer (a company we’ve come across before, too — they’re also partnered with Altius for uranium projects in Canada, and I suppose they could also be a feasible solution for this teaser other than the fact that they’re four times larger than AuEx). Fronteer bought 51% of the project in exchange for funding a big chunk of the first drilling programs, and they are managing the project together right now, with both investing in additional drilling.

The reason that AuEx jumped out at me as interesting, aside from the fact that they seem to match the scarce clues reasonably well and might perhaps have good news on future drill results, as Badiali appears to tease, is that they’re a pretty diversified junior exploration company that looks like it has an interesting portfolio of exploration properties (most of the others are also in Nevada, though they have a couple other sites and projects as well), and a focus on joint ventures to manage risk and minimize their need to be super-dilutive with share offerings to fund ongoing drilling, sort of like the prospect generators who drill, get some initial good results, then bring in partners to pay for the next wave of exploration. They also claim to have advanced technical capabilities beyond other miners in analyzing core samples and other data to improve their results, but I can honestly say that I have absolutely no idea whether or not that claim is reasonable.

So that’s all I’ve got for you today — a tough-to-crack teaser without many clues, but at least one little explorer/prospect generator that looks like it’s a match, and that has a story that’s probably worth looking into if you’re excited about gold’s future. If you have better ideas, or any opinion on AuEx, or want to throw out possible solutions for the other two, feel free to share with a comment below. Thanks!

P.S. I promise I’ll try to focus on a teaser that I can clearly and definitively solve for you next time!

Full disclosure: I own shares of Altius Minerals as of this writing, but do not own shares of any other company mentioned. I will not trade in any investment noted above for at least three days.

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41 Comments on "“Tiny Gold Stocks About to Soar?” Matt Badiali"

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SnoopyJC
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0
November 10, 2009 1:03 pm

The proper pink sheet symbol is “AUXVF”.
–joe

Woman with Portfolio
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November 10, 2009 1:03 pm

The U.S. symbol I get for AuEx on the U.S. pink sheets is AUXVF rather than AUEXF. The stock is very thinly traded, even in Toronto.

Gravity Switch
Admin
11
November 10, 2009 1:05 pm

Geez, and I thought I was quick in fixing the typo — sorry, you guys are even quicker, it’s correct now.

Ilan
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Ilan
November 10, 2009 1:42 pm

I suspect that company 2 is Eastmain (ER-TSX) it recently reported a great discovery as far as concentrations of gold (including 254 g/t!) in their wholly owned source (http://www.eastmain.com/news/20091024er.htm)
They trade around c$110 mil so they fir the numbers and a confirmation of the initial report in all likelihood can send them over the hill. However I can’t be sure due to the lack of clues…

KS
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KS
November 10, 2009 2:33 pm

As gold deposits go, 450,000 ounces is relatively small. Break-even production in Nevada these days probably requires a minimum of 250,000 ounces at reasonable grade (>2 g/t) and maybe 500,000 ouncs at grades of 1-2 g/t. Mid-tier gold producers only get interested if the deposit is > 1,000,000 ounces and the majors like ABX and NEM only get interested in an acquisition if they see potential for > 4 Moz. So, why should I be excited about 450,000 ounces. It is a nice start, but the company needs to grow the resource.

Carlo
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Carlo
November 10, 2009 4:50 pm

I don’t know what the other two companies are, but since focussed on Canada, one worth strongly considering is an Aussie junior Atlantic Gold (ASX.ATV).

It has 2 primary deposits in Nova Scotia (470G and 450G oz respectively). Total resources are around 1.2M with most of these in the ‘indicated’ category.

The guys behind this company are the same guys that founded ‘Plutonic’ which they turned into the 3rd largest Aussie gold company before it got taken over by Joe Gutnick (who coincidentally has recently taken an interest in Acadian Mining which is also operating in Nova Scotia).

Following flyer saids it all:

http://www.atlanticgold.com.au/pdf/other/090928_ATV_EME_handout.pdf

Stephen Woloshyn
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Stephen Woloshyn
November 10, 2009 5:34 pm

One Cdn gold mining stock that seems to be hot of late is Lake Shore Gold (LSG-T) which is combining with West Timmins Mining (WTM-T). I haven’t had time to compare data to that of tease…

RICHARD
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RICHARD
November 10, 2009 5:45 pm

ANYONE HAVE ANY THOUGHTS ON THE BIO STOCK HTDS I AM TOLD IT IS GOING TO GO THE MOON IN THE NEXT WK OR SO PLEASE LET ME KNOW

Riccardo
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November 10, 2009 6:19 pm

The 2nd company is almost certainly Clifton Star Resources, Inc. who is hitting gold about 97% of the time they put down a drill. The ores are 2-3 times richer than Osisko which it is not far away from. They have not yet drilled to depth as they are focused on finding just how wide their ore zones are. CFO.V or CFMSF.PK .

Lore
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Lore
November 10, 2009 10:15 pm

Talking about small gold companies,I think Vault Minerals Inc could be the company in Greg Mc Coach’s teaser earlier this year.It is 2700 ft west of the Macassa “Monster Mine” of Kirkland Lake Gold ,has 2 projects -Goldbanks and Label-
Share price has been going up recently.
Who knows more about it ???

zinfool
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zinfool
November 10, 2009 11:11 pm

I think company #2 is Explor Resources Inc, they are located in the West Timmins/Porcupine Fault area, Lake Shore is next door as is West Timmins main drill area. Been following the Co., don’t own stock yet. I think the third Company is Golden Chalice Resources, tiny but very well positioned in the West Timmins area. CA:EXS Explor, about .42CDN
CA:GCR Golden Chalice Resources about .12CDN… what you think??
PS Explor is also Greg McCoach’s teaser, as the Co. next to CA:WTM, West Timmins Mining property.

James Marx
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James Marx
November 10, 2009 11:33 pm

Stock #2 Explor Resources CA:EXS
Stock #3 Golden Chalice Resources
CA:GCR both in the West Timmins Porcupine Fault area of Canada

Riccardo
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0
November 11, 2009 12:07 am

OK, #2’s clues are 2 million ounces – Clifton Star announced this on Sept. 8 – and 1.4 million ounces were inferred, again same as announced by CFO.V. They are expecting two more 43-101 reports in the next 30-60 days (they are overdue) and many of us hope to see another 2 m ounces au. Total would be 4m ounces x $1,000 an ounce would give you Badiali’s $4 billion, except that you should value gold in the ground at $200 an ounce, not $1000 an ounce.

Riccardo
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November 11, 2009 12:23 am

Sept. 8 Clifton Star 43-101 was 2 million ounces and about 1.4 million inferred. This is Badiali pick #2. They have two more 43-101’s coming out and we are hoping to see another 2 m ounces. So 4 m ounces total x $1,000 an ounce and you get Badiali’s $4billion. Pick #2 is CFO.V

Geo
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Geo
November 11, 2009 10:56 pm

Au ex is a good call for number 1. It has a 450K oz. Au deposit now, but most likely will have much more. They have joint ventured with Eldorado Gold & Agnico Eagle so they only have ~ 1/2. Good risk for increased ounces.

MM
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MM
November 12, 2009 10:24 am

Company #3 may be Explor Resouces – EXS. Very small company, with a lot of murmurings right now about confirmation of the deposit.

MarMak
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MarMak
November 12, 2009 3:34 pm

I believe stock #3 is Explor Resources which I own and is touted by another gold bug I subscribe to.

Tony
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Tony
November 12, 2009 10:02 pm

Anyone where know which US Brokers would allow me to buy stocks like:

scm.v
ani.v

Not sure what the .v is for?

Either way, I can’t find these symbols at Scottrade or OptionsXpress.com

deepdiver
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Curt
November 13, 2009 12:16 pm

I think .v is canadian TSX-Venture exchange. Your broker may use a different code. The .v code shows up on Yahoo. My broker, Fidelity shows up as CFO.V. I didn’t check others.

Dom
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Dom
November 13, 2009 2:59 pm

Like comment on Dan Ferris letter EXTREME VALUE. Visible Gold in Newfoundland.

Yvan
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Yvan
November 13, 2009 3:20 pm

MEGABRAND MB ON THE TSX
ON THE ROAD AGAIN UPLIFT IN THE AIR

Giovanni
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Giovanni
November 14, 2009 8:29 am
Below is the comment from Dan Ferris re Visible Gold in Newfoundland as per Dom’s comment above – “This little gold miner I’ve been telling you about isn’t planning to mine a single ounce of this gold….Let me explain… In the precious metals business, the best way to make money is not as an explorer… or a producer. No, the best way to make money is to get a foothold on profitable mining royalties. And that’s exactly what this little company does. They don’t do any digging, production, or actual mining. Instead they simply scout out mineral-rich deposits, find a… Read more »
darinmichl
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November 14, 2009 10:39 am

#1 atac resources tsx: atc
#2 Auex ventures tsx: xau
#3 Rainy river tsx: rr

This info is 100% solid

goldveteran
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goldveteran
November 14, 2009 2:40 pm

The Dan Ferris Extreme Value pick is Altius which has a JV with Northern Abitibi exploring the Viking Gold project. His pick is actually Altius, which has a huge basket of projects including a royalty on Voisey Bay but would not be particularly leveraged to the Viking Gold project. The latest drill analysis did not confirm Ferris’s hype in the email.

Giovanni
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Giovanni
November 15, 2009 1:20 am

As far as I can see from the company’s website, Altius seems to have royalty interest in Voisey Bay project for nickel copper & cobalt but apparently but not for gold. Ferris’ Extreme Value pick specifically mentions a small company with gold royalties in this Newfoundland mountain region. Any more offers?

Sam
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Sam
November 16, 2009 1:28 pm

Take a look at Mountain Lake Resources. Newfoundland Mountain Region: MLKRF Fit the profile.

Also, take a look at Explor Resources, Inc. EXSFF. Good potential.

John
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John
November 16, 2009 11:15 pm

Anybody know of a good online discount broker for the Toronto Stock Exchange?

Pete
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Pete
November 18, 2009 5:49 pm

Buy wessdome and lsggf (lakeshore) don’t waste your time with thinly traded explorer companies. Both these mine are unhedged with no debt with great land positions. Also FVITF great silver and base metal company in mexico amd south america.

Rich
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November 24, 2009 11:35 am

Has anyone considered we may be in a gold mania blowoff here?

Geo
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Geo
November 11, 2009 11:01 pm

Correction: Fronteer & AEM are the JV partners.

wgsmith55
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wgsmith55
November 13, 2009 1:16 pm

Has anyone received this teaser?
“Bursting with Gold: How Newfoundland’s Golden Mountain Could Make You a Fortune.” If you have, what company do you think it might be

Tom
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Tom
November 15, 2009 8:32 pm
I have to say that I am surprised that the Stock GumShoe does not have an answer for the three companies—specifically the mining company in Newfoundland. I do not have it either and I have searched an hour or so and usually have better results than I do at this time. Since the time I started reading the GumShoe’s reports (after doing my own attempts at discovery of stocks through “teasers” and discovered the Gumshoe by accident when googling info and realized the Gumshoe’s existence–thank you by the way)I have found that the GumShoe is very good at putting light… Read more »
Yvan
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Yvan
November 13, 2009 2:46 pm

MOUNTAIN LAKE RESOURCE Cdn $.32

On the TSX venture Toronto
Just bought 10000 stocks

Yvan
Guest
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Yvan
November 13, 2009 2:54 pm
Eastmain resource is very solid big investment from Goldcorp. Goldcorp report the building of the camp to install the mining equipement last fall due to the recession and move all the material to thunder bay ont They will build a road from HQ sarcelle new power dam around 60 kms they will build a camp and also Hydro Quebec install a power line from Eastmain to the mine site that is completed so it is a mather of time i was on assignment for HD up to this summer, as i quit for retirement Eastmain resource is a long term… Read more »
Yvan
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Yvan
November 13, 2009 2:57 pm

West timmins and Lake shore are associated but the new player beside the area EXPLOR RESOURCE Thanks Gumshoe that put me on the line so EXS BUY 10000 SHARES

Riccardo
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November 13, 2009 3:31 pm

Yes, Curt. CFO.V on Yahoo is TSX. It looks to me like Explorer has no 43-101 but it has bought some properties around the Clifton Star properties. Since the latter has 2 million in 43-101 it is much closer to the point made above that you need 4-5 million in 43-101 to even get a look by the large gold miners as acquisition targets. CFO.V should be there very soon, since it is well known that they have only explored a portion of their properties and not even at depth yet.

JR
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JR
November 16, 2009 12:00 am

The “Mountain” of gold cannot be Mountain Lake Resources. They do not fit the teaser: Royalty company, IPO in 2003.

I wish you well with your 10000 shares.

Jay
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Jay
November 16, 2009 12:13 pm

RR doesn’t fit the bill for #3. The clue is 250,000oz in estimated reserves. RR has 2.2 million indicated, 1.8 million inferred.

George Helm
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George Helm
September 9, 2010 10:30 am

Spot on, verified, second tease coming.

Kerry
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Kerry
November 21, 2009 12:52 am

http://www.Questrade.com

Is the cheapest I have found.

Dan Knowles
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Dan Knowles
January 8, 2010 12:34 pm

I came to that conclusion also, but I just rec’d that teaser on 1/5/10! In it, does he mention just returning from dinner in CO and answering the phone? How old is the teaser? I’ve been searching like mad (part-time only!!!) b ut based my hunch on price, based on what little info I could find. ANy response would be appreciated, but mostly I would like to know how old the teaser is!
Thanks

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