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.
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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!