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! )

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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!


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Anonymous
Anonymous
12 years ago

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 around .80 is Acadian Mining (ADA.tsx or ADGLF.otcbb). Both companies are listed as ‘strong buys’ with Acadian mining being one he’s backing up the truck to buy.
I suspect that CZN.tsx might be one of the companies that would be in his new service, which I took a pass on, due to the performance of his other two services I have had experience with. He has hit a few real winners, but not many since I’ve been in the ball club!

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bruno12
bruno12
12 years ago

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.

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StockGumshoe
StockGumshoe
12 years ago

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 service probably has very few subscribes so far. Good to know.

And I’m glad to hear your experience with McCoach — I think that’s to be expected with almost all of the small cap mining/exploration newsletters, there are going to be many, many dud picks and hopefully one or two that gain several thousand percent … lots of rolling the dice, especially if you’re counting on choosing what you think are the best few stocks from a service (as opposed to buying all the picks).

I would think that to be a happy subscriber to services like these you’d have to be very confident that “your guy” is smarter or better connected than the other touts.

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Anonymous
Anonymous
12 years ago

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

Anonymous
Anonymous
12 years ago

No Pain… Big Gain(s)
By Jim Nelson
December 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 two will soon be revolutionized. The first hasn’t had a medical breakthrough in years, yet current products have many side effects. This is about to change…

Intravenous (IV) therapy is one of the most common procedures performed in hospitals and clinics. Sometimes physicians even have to place a port inside a vein for those who require multiple IVs over a short amount of time. But as anyone who has had one of these can tell you, it hurts. Fortunately, it doesn’t have to.

In many cases, physicians will prenumb the area where one of these ports or IVs is going to go. Unfortunately, current anesthesias for this particular pain are insufficient and come with many side effects. That’s about to change…

You Be the Doctor

Imagine for a second that you are a doctor or nurse. A child at your hospital needs an IV. Even though you use a smaller needle, to a six-year-old, it’s still quite painful.

You have to see his or her face grimace in pain. Now picture you have to do that over and over again, every time you treat one of these children. Eighteen million pediatric IV procedures take place every year.

Now imagine someone comes to your hospital with a new type of powder that can numb the area where the needle will go in the child’s arm or hand. One to three minutes later, you can slide the IV or port in and the child feels nothing. Ten minutes later, the child has complete feeling back, as if nothing happened.

It’s pretty obvious you’d insist the hospital keep a steady supply of that product for the next time a child needs an IV. Well, soon they will…

Grandma’s New Knee Won’t Hurt Any Longer

The second area of the pain industry is postsurgical pain. There haven’t be any significant improvements for the pain people endure after major surgery.

There is one company that is developing a pain reliever to treat the pain associated with total knee replacement surgeries, bunionectomies, arthroscopic shoulder surgeries, tendonitis and inter-metatarsal neuroma.

The potential market for all of these different pains is at 8.4 million procedures per year. But it is growing exponentially…

Take total knee arthroplasty (TKA) procedures, for instance. There are currently 470,000 of these procedures every year. But by 2030, the American Academy of Orthopedic Surgeons expects about 3.5 million TKAs annually. Unfortunately, little has come along to help those who are suffering through all this pain. Until now…

As you probably know, there are already some drugs out there. But compared with its potential competition, a new drug has already proven that it performs far better. It is long lasting, which is extremely important for patients who have to go through physical therapy. It lasts about 8-12 weeks, compared with just a few days, or even hours, for current treatments.

And so far, the clinical trials have shown minimum side effects, unlike its competition. Others treatments cause problems like nausea, respiratory depression and degenerative effects on cartilage. This new one shows none of those effects.

Now, here’s the dilemma: My fellow Sleuth editor Greg Guenthner is recommending the company that owns both of these pain treatments to his Penny Stock Fortunes readers, in the next few days. I can’t give it away without risking huge backlash from him. (His desk is about four feet from mine and he’s loaded with thumbtacks.)

But, here’s what I can do: Take a look at this report. See if his newsletter appeals to you and sign up. That way you can be one of the first to find out about this company. It really does have the potential to be the biopharm breakthrough of 2008.

As for the overall pain industry, that will be something I keep my eye on very closely. So until I find something for you…

Sincerely,
Jim Nelson

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Anonymous
Anonymous
12 years ago

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.

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Anonymous
Anonymous
12 years ago

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. A feasibility study will also be required if they wish to finance their project using debt and/or equity.

duxx
duxx
12 years ago

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

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Anonymous
Anonymous
12 years ago

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.

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shamus
shamus
12 years ago

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).

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Gravity Switch
12 years ago

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.

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Big G
12 years ago

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.

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NBKid
NBKid
12 years ago

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
Patrick
12 years ago

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

Jordan Mcfeeley
9 years ago

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