I generally don’t like to write about super-heavily-hyped microcap stocks for the whole Gumshoe readership, because we’re almost guaranteed to cause a spike in the price for that stock. So when I saw the latest teaser for the Phase 1 folks over at Stansberry, and those teasers always cause a huge flood of emails to come our way, I thought I better cover it just for the Irregulars.
Phase 1 is a self-limiting high-cost newsletter from Stansberry & Associates — they generally cover very small companies and try to offer value-added stuff like conference calls with management. In the past they’ve usually offered Phase 1 “for sale” for $3,000 when they’ve run a heavily hyped tease, but this time around it’s at “full retail” of $5,000 a year. And they say they’re limiting it to 75 folks, which implies that you’re in a very small list of folks who read about this stock — but, of course, they’ve already told their existing subscribers about it (a couple thousand folks, presumably, few of whom have taken a vow of silence).
So anyway, as a half-hearted effort to impact the price as minimally as we can we’re having a “Wednesday File” this week instead of a Friday File. And the price will probably still spike, even though we have many fewer Irregulars than we do free readers … but at least we can minimize it this time (and the other option, ignoring a heavily hyped little teaser stock that hundreds of readers are asking about … well, that may work out better for your portfolio most of the time, but it goes against our very DNA).
So here goes.
The teaser is intentionally very vague on most of the clues — and they went so far as to say that they’ve changed some of the details to protect their pick. Which, of course, just makes me that much more eager to sniff out the answer.
The ad is from Frank Curzio, who now helms Phase 1 but isn’t really a mining guy — so these Phase 1 picks seem often to be “group projects” lately, Matt Badiali, their geology dude, apparently went and visited the project in question to vet it.
They describe this pick as a replay of their April 2009 pick of a “microscopic” gold stock that they limited to only 100 subscribers — I don’t think I covered that one if it happened to have been teased at the time (that was before Curzio’s time and, I think, after Rob Fannon had left, so I presume it was a Matt Badiali pick). And he makes clear that subscribers had the opportunity to make huge profits on that pick, of course. My suspicion is that he’s talking about Seabridge Gold, but I’m not sure — that was a Stansberry & Co fave for a while, and a big winner for many of their subscribers.
So this time we have a “similar gold stock” — here are a few of the clues Curzio shares:
“It has a market cap of less than $70 million and trades for less than a dollar a share….
“… the man behind the company we recommended in 2009 is also behind the company I’m going to share with you today.Are you getting our free Daily Update
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“He’s one of Porter’s most trusted contacts in the resource sector. He’s also one of Canada’s richest and shrewdest investors. In fact, he’s such a disciplined investor that over the past 12 years, he’s only gotten involved in four resource stocks.”
And of course, we get the “look out for the mighty Stock Gumshoe!” warning, which works somewhat like a red flag waved in front of a bull:
“I can’t name his name…or the names of the companies he’s backed…because I can’t risk exposing a single detail about the company he’s backing today. If this gets blasted all over the Internet, the opportunity could quickly be lost for all.
“(In fact, throughout this presentation we’ve had to deliberately obscure some of non–essential details of this current opportunity.)”
Deliberately obscured, eh? I challenge you to a duel, varlet!
Well, OK, not a duel. But I don’t like when folks hide stuff from me, so I’m going to figure this out …
Thanks to that “deliberate obscuring,” we’ve got to read between the lines a bit for this one. Here are a few more excerpts to give you some of the flavor of the pitch:
Badiali says that
“The geology is almost identical to other deposits in the area which hold hundreds of millions of ounces of gold. I think this could be another huge winner in this prolific gold region.”
And it’s in “one of the world’s richest gold regions” … here are a few more clues:
“…the company owns thousands of acres in one of the world’s richest gold regions.
“The fact is, this region has the largest concentration of gold in the earth’s crust.
“One major daily newspaper, whose name you would instantly recognize, describes this region as a geologic fluke ‘unlike any gold belt in the world’ and continues to amaze geologists as ‘a seemingly bottomless pit of gold.’
“A research paper put out by a well–known university says the discovery of this gold region ‘is one of the most significant events in worldwide mining…’ “
Which gives some idea of what the region might be — but to help us narrow it down further we’re teased that it’s helped create two mining giants. It might help to know who these are, so we get a few clues:
“Company #1… went from $4.48 a share to over $67 for a gain of almost 1,400%. Even better, one of their projects is next door to the land our tiny company owns. That project alone has already produced 6 million ounces of gold!
… has a market cap over $30 billion.”
“Company #2… went from .45 cents a share to over $52 a share with the help of its flagship mine in this region. Amazingly, the mine produces over $3 million worth of gold every single day and is estimated to have deposits totaling $10 BILLION….
… has a market cap of over $40 billion.”
So that, going from the charts that they show to go along with the teaser, means that the big-shot neighbors we’re talking about are almost certainly Newmont Mining (NEM) and Barrick Gold (ABX), respectively.
And if those companies control “three of four” key land positions in this region, we’re almost certainly talking about the prolific Carlin Trend in Nevada, home to Barrick’s Goldstrike mine and to a handful of mines that Newmont operates in the region. Carlin Trend discoveries and mines have largely been of the low-grade, open-pit, large volume type, and some of them are among the largest mines in the world. It’s generally referred to as the biggest gold mining region outside of South Africa, though I suppose that depends in part on how you measure.
So the idea behind this teaser is that the secret company owns “Territory 4”, the only remaining “mining territory” that’s not controlled by Newmont or Barrick in the Carlin Trend.
And part of the reason that they’re picking this is that Porter Stansberry’s “trusted contact” is a big investor, having poured “millions of dollars” in to the company. But they also emphasize that another key is that their “lead geologist” is a local expert:
“… he’s been working this gold field for over 30 years and probably knows more about this region than any other man on the planet.
“More importantly, he used to work for one of the billion–dollar companies I mentioned earlier.
“Get this: He’s the geologist who is personally responsible for two of the largest discoveries in the region – A 6 million ounce deposit and a 10 million ounce deposit.
“And he’s one of the reasons the company believes their parcel of land – what surveyors call Territory 4 – has such huge potential and likely contains a several million ounce gold deposit.
“You see, this geologist’s 6 million ounce discovery is directly next door to the land the tiny company owns.
“Naturally, the company suspected the fault lines extended into their property…
“And they were right.
“Both properties have the same gold system of Devonian and Silurian limestone, and this geologist has since said they share ‘almost identical geological characteristics.'”
And apparently, they’ve already found some gold in “Territory 4” …
“They’ve found 150,000 ounces of gold from surface outcroppings and shallow drilling….
“What’s more, the gold found on this tiny company’s land is of a higher gold concentration than its next door neighbor.
“You see, the 6 million ounce discovery next door has 1.8 grams of gold per ton…
“But this tiny firm has 2.0 grams of gold per ton.”
And we get a few more tidbits about the company to throw into the Thinkolator …
It’s apparently not been explored because it was “privately held” for 50 years and sales terms couldn’t be reached. This “tiny company” then finally managed to buy 100% ownership thanks to their “high level investors with deep pockets.”
And they’re drilling now, which Curzio thinks could help the stock “explode in 2012” — in his words:
“You see, the company has four drill holes in progress, and the ore that’s already been uncovered from these holes resembles “the best gold deposits” in the region. In other words, it has similar mineral composition to the 6 million ounce and 10 million ounce finds.
“Better yet, some of the ore has had as much as 4 grams of gold per ton….
“Not only have they found ore with as much as 4 grams of gold per ton…
But data based on the company’s recent findings has determined the “gravity” on their property is almost 3–TIMES the size of the “gravity” on the land next door.”
I don’t know what “gravity” means, other than the fact that it impacts my old bones quite impressively when I’m snowboarding, but Curzio quotes Badiali as saying that this implies that the “gold bearing intrusion” on this property is three times the size of their six million ounce neighbor’s.
And beyond the key contacts mentioned we get the minor leetle clue that …
“there’s another legendary resource investor who’s one of the largest single shareholders in this company.”
And, of course, they’re revealing this special report to their Phase 1 subscribers now, and giving it to those 75 new subscribers, but they’ll be sharing even more detail and info at their January 25 conference call with the CEO and geologist from their teased company along with some other folks and experts.
So who is it?
Well, let’s see what we can find.
There are a few relatively large land owners in the Carlin Trend who think they’ve got the best land position, including names like Evolving Gold, which might claim the acreage title — but for those clues our Thinkolator points us right at …
Gold Standard Ventures (GV in Toronto, GDVXF on the pink sheets)
And it appears they released this report to their existing subscribers over the weekend, because the stock is now well above the 70 cents it traded for last week — enthusiasm has driven it up to 90 cents as I type. Still under the buck that Curzio cited, and with a market cap of right around $50 million. Tiny. If you do decide to look into this one, be careful — there aren’t that many folks who can read our Irregulars articles, but it’s certainly plenty enough to impact the share price of a teensy stock like this, usually, unless there’s a “real” catalyst in company news to follow, spikes in prices caused by newsletter recommendations like this fade back to reality pretty quickly.
It does hold what they call the “Fourth Window” on the Carlin Trend, which isn’t necessarily a huge undiscovered land area compared to some exploration companies … but that is the fourth spot on the trend where gold shows at the surface on top of a hill, and is apparently analagous in at least some ways to big discoveries nearby. And it’s the one that has had almost no attention from explorers with modern equipment.
GV’s project is called the Railroad Project and has surface gold, tallying up at 150,000 ounces at three grams/ton — so that’s pretty much a match. And it is plenty big, 16,000 acres. They also have a few other projects, though clearly it’s the Railroad Project that’s getting their attention and investment now. They acquired the district in 2009, and have been adding to it with acquisitions since to expand their target areas.
The close neighbor that’s teased is the Rain deposit, which is about six million ounces and was, at least in part, discovered by Dave Mathewson when he worked for Newmont. And Mathewson is now the VP of Exploration for Gold Standard Ventures, so presumably he’ll be on that conference call with the Phase 1 folks in a couple weeks. Mathewson is pretty active in updating investors, he even has YouTube channel to give updates from their exploration (you can see some of his commentary from October here, haven’t seen any udpates lately).
Gold Standard has a decent Fact Sheet here, they put out quite a bit of investor info — if you’re like me you won’t understand all the geology, but there’s plenty to view if you like. The chart that Curzio shows in his tease is clearly excerpted from the horizontal view comparing the “Rain Dome” with GV’s undiscovered “Railroad Dome.” So that’s a bit more definitive in matching our tease. The longer investor presentation is available here.
And there are, as noted, some heavy hitters on board in addition to Dave Mathewson — including Rudi Fronk and James Anthony, who co-founded Seabridge Gold and are on the “Board of Advisors” for Gold Standard.
Does that mean it’s going to make you rich? Beats me. They are in a district with plenty of mining infrastructure, they have some big-name advisers on board and enough cash to do a bit more drilling, their geology guy has some real experience with similar discoveries, and the teased stuff (like a big of 4 grams/ton found) is generally a match, despite the facts that were changed to protect the secret.
But unfortunately, I know dang little about mining and evaluating exploratory stage mining projects — one of many reasons why I’m not charging you $5,000 to read my blather. I’m sure there are those among you who can shed some light on the prospects for this latest Carlin Trend explorer — they do seem to be starting out with a prospective piece of land, and I know the Stansberry folks recommending it will be far more expert than I am on this topic, but I’m sure there are plenty of resource investors who’ve been burned by similarly appealing prospects in the past.
Oh, and, of course, it has shot up by about 20 cents since Phase 1 apparently recommended it to their subscribers over the weekend — and though that’s peanuts compared to the huge gains Curzio apparently believes are possible, I don’t know what Curzio’s “buy up to” price might be, or whether the conference call in a couple weeks might cause further movement in the share price. Certainly they aren’t infallible in picking huge gainers among the junior miners (no one is — it’s a deadly business), so go forth, researchify, and don’t go crazy investing on just the teaser hype.