“Africa’s $10 Billion Secret”

By Travis Johnson, Stock Gumshoe, March 26, 2007

This one was sent in by dozens of readers, one of whom actually provided the name of the company for followup research — I checked it out, and I think the answer he provided is correct. He wants to remain anonymous, otherwise I’d happily give him credit (as I’ll credit anyone else who correctly sleuths out any of these teasers before I get to them).

This teaser has one of the more over-the-top lead-ins of any I’ve seen:

“A flamboyant Russian billionaire… a former KGB agent bent on revenge… a swank
bordello in the French Alps… a $10 billion mineral mine hidden in Africa’s rugged Gold Coast… a 2,600-year-old Egyptian artifact… and a tiny $2 micro-cap stock poised to hit $27 per share!”

This is from Breakaway Investor and Small-Cap Commodity Prospector’s Andrew Mickey.

And the investment is in a cobalt company — here’s one metal I’ve never heard mentioned as an investment vehicle, but according to this ad … “From cobalt’s applications in health, communications, and national defense… modern society could not function without cobalt.”

It’s apparently a critical ingredient in guided missiles, batteries — including hybrid car batteries, aerospace, disk drives, etc. Who knew?

OK, so that’s interesting — what else do they provide to tease out the company name?

The mine in question is in Cameroon, and the importance of the cobalt it holds was noticed by a US investor. And his company has exclusive rights to develop this cobalt mine, perhaps because of some high-level political hanky panky (the Russian intrigue stuff in the teaser relates to Norilsk Nickel and Russia’s dominance of cobalt, which is strategically difficult for the US to handle, so there’s an intimation that a Cameroon-US political deal is part of this mine’s provenance).

“It is estimated that the mine has $10 billion worth of cobalt!”

mining costs are very low. In fact, they are lower than anywhere else in the world… only 96 cents per pound.

“Remember: Cobalt is selling for $30 per pound. With the Kremlin restricting supply, cobalt prices could easily soar to over $50 per pound.”

The company is capitalized at roughly $100 million.

It only recently (Dec. 6) began trading on a “major exchange.”

The company’s
“cobalt assets alone [they have some rights to other mining prospects, too] are worth an easy $3 billion.”

They even add a few fake names to make the teases a little tougher to find — CobalCam is the fake name of the company, and Stevanovich the pseudonym of the US investor.

So do you want to sign up as a “Charter Member” of this investment service? Or would you rather just know the name of the company?

The Stock Gumshoe is guessing you just want the name — and thanks to my anonymous tipper and some sleuthing, I can tell you that the company in question is …

Geovic Mining Corp. (GMC on the Toronto Venture Exchange, GVCM.PK for US investors on the pink sheets)

The best confirmation? The exact cost the company is projecting for their cobalt extraction, with the quote from one of their prospectuses being: “Cash operating costs, net of nickel credits and including production taxes, are estimated at US$0.96 per pound of saleable cobalt.”

That’s a perfect match, and with all the other matches (the location, the general history of the company, even the ethnicity of the pseudonym are all matches — Stevanovich is actually William Buckovic, who owns about 20% of the company now), I’m willing to bet that this is indeed the company we’re being teased about.

I’m not willing to bet it’s a great investment — I’ll save that for more ambitious researchers who can really delve into the Cobalt market, parse the Cameroon political risks, analyze the company’s finances, and tell you how the many outstanding warrants might impact the share price (or whether the warrants are a better buy than the common stock). Like a lot of tiny companies, this one came into being (and came public) as a result of a “reverse merger”, which also usually raises some questions. And I can’t answer those questions.

But at least you know the name of the company — they trade primarily in Canada, so hit sedar.com and read up on all those filings to see if you think it’s really a good idea. And feel free to post some comments here to share your opinion with your friendly Stock Gumshoe and all the others who got interested in this tease.

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March 27, 2007 1:31 am

Cobalt also occurs in high per centages (~50+%) in Doloro Stellite hard facing alloys. Canada had a promising play called Canmine Resources until the bottom fell out of the cobalt market in early 2000’s (went to $5/#)and the financial people pulled the plug on Canmine

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