Tiny co. Pays $3 million for $2.9 BILLION in gold …

By Travis Johnson, Stock Gumshoe, April 30, 2009

That’s the promise of the latest teaser ad from the Penny Mining Speculator, Chuck de Castro’s pricey newsletter ($5,200 a year) that shoots for the moon using little mining companies with great potential.

We’ve looked at de Castro’s stuff a few times before — he turned us on to a tiny oil stock that did well for a little while, and at least one other gold miner (I think that last gold miner of his that we looked at is probably his “bonus pick” in the current ad, more on that in a minute). We haven’t got any reviews of this service at the moment (if you’ve ever subscribed, please share your review of Penny Mining Speculator now), and I don’t know anything about his long term track record. He claims, of course, that it’s spectacular.

But this one sounds interesting, at least — so let’s dig it up, shall we?

Penny Mining Speculator remains a low-tech operation, it appears — they take their orders by phone and they often have little mail-in forms at the end of their email ads, so I can’t point you to their ad directly … let’s look at the hints in our teaser …

Here’s the big picture:

“If I told you about a little mining company that bought a large gold property in West Africa for $3 million, and right out of the gate found $1.4 BILLION of gold, would you be interested?

What if I told you that just recently they doubled that to $2.9 billion of gold … and all that gold came from just a small sliver of their property? And they’re just starting to drill on the rest of their property?

“The company’s boss is a mining veteran who spent 22 years finding some of the world’s biggest gold deposits for Canadian mining giant, Placer Dome.

“When he started this little company, he scouted out this 28-square mile property in one of the hottest gold regions in the world and nailed it down for $3 million in cash and stock.”

And it’s not just this one property that de Castro likes …

“Moreover, they have a second property in the region, which I think is equally promising.

This second property is very close to a major gold mine owned by Newmont Mining.”

He goes on to tell us that he recommended this one to his subscribers six months ago, and they’ve already seen gains of 118%. Not bad, though if you picked the low about six months ago and the recent high, the gold miners’ index (as represented by the GDX ETF) also went up by about as much from November to April — six months ago was a really good time to buy almost any gold miner.

But the gains haven’t stopped, according to our teaser:

“$2.9 billion in gold makes this $66 million company’s shares risk-averse. Even if the gold market cools off, I expect the shares to double again by this time next year.”

Of course, I expect my kids to brush their teeth without being told, too, doesn’t mean it’s gonna happen.

He goes on to say that the shares are around $2, and they could easily triple in a rising gold market. So that’s most of the clues … whaddya think?

I threw all that into the mighty, mighty Thinkolator