“Mystery Island: 9000 Miles Off the Coast of Florida”

by Travis Johnson, Stock Gumshoe | August 20, 2007 7:17 pm

That’s the mysterious tagline of a recent email I got from the S&A Gold Report from Matt Badiali. He’s teasing us with the name of his favorite commodity penny stock, all we have to do is start a subscription for $99 …

… or, read on, and listen to your friendly neighborhood Gumshoe for free.

Shall we whet your appetite first?

“Triple Digit Gains on Mystery Island”

Cue spooky music, thunder and lightning. But wait, that rain coming from the heavens — it’s money! Cold, hard cash! We must grab it quick, quick, before Mystery Island recedes into the mist!

Or at least, that’s how I pictured it while I was reading the email. In reality, it appears, the situation is somewhat more subdued. Still, credit the Stansberry copywriters for conjuring up some good visuals.

So … what is this “Mystery Island?”

“On a little-known island, 9,000 miles off the coast of Florida … Billions of dollars of nickel and copper lay trapped beneath its surface – until recently.”

Oooooh, I love this movie! This is where James Bond comes in, right?

No? Scooby Doo, then?

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Hmph. OK, more clues:

“The Mining News reports, that ‘after nearly four decades of self-imposed isolation, [this island] has been reopening itself to the outside world and foreign investment.’ “

And the World Bank says they’re “very rich in minerals and precious stones.”

The World Bank is famous for their mining and exploration prowess, right? Or is that the IMF?

There are a bunch of junior mining companies exploring “Mystery Island,” apparently.

And Badiali describes the one he’s teasing about thusly:

“According to my research on their findings, I believe that the land they are testing could lead to uncovering a mine worth up to $3 billion. This is over 16 times what the company is even worth.”

Other clues:

Between February and July this year, the stock climbed 85%.

They have three “world class” mine sites, and “exploration permits of more than 100,000 hectares of prospective.”

OK, who can picture in their mind how big a hectare is … no? I can’t either. We’ll stipulate that it’s “pretty big.”

So … are you ready to learn the name of Matt Badiali’s “Favorite Penny Stock of 2007?”

Me, too. A moment of your patience, please, while I find the thinking cap. And the batteries. Ok, this wee firm is almost certainly …

Wait! First, don’t you want to know the name of “Mystery Island?” This is a two-parter …

The Mystery Island is …. Madagascar. And I wager that even the Madagascar Tourism Board has never, ever referred to the place as “9,000 miles off the coast of Florida.” While technically true, it’s more frequently and simply described as “about 250 miles off the coast of Mozambique.” That’s on the East coast of Africa, for those who are geographically challenged.

And Madagascar did indeed recently reopen to foreign mining interests, to some acclaim. The Mining News article that Badiali quotes about Madagascar is here[1].

So now, which of the many companies is it that we’re dealing with here? At first I thought this was Pan African Mining, and I think I emailed someone that, but it’s not. No, it looks to me like this company is the much more interesting …

Jubilee Platinum (JLP on the AIM in London, JUBPF on the pink sheets, where it appears to trade extremely thinly)

Jubilee is much more well known for its Platinum holdings in South Africa, but they do have three key sites in Madagascar as well, Londokomanana, Ambodilafa and Lanjamina. They are also, for full disclosure, significantly owned by Ambrian (Ambrian owns around 10% and is the largest shareholder), which itself is a Stansberry and Associates recommendation from April[2] and a holding in my personal portfolio. Ambrian describes Jubilee as one of the few mining holdings that they want to keep as a core part of their portfolio, even as they divest most of the others.

So, that’s a few endorsements, and that’s about all I know about this junior miner. What is this company?

Well, as noted above, they do have over 100,000 Hectares of prospects in Madagascar, which is apparently a compelling place for mining lots of good stuff like Gold, Nickel, Copper, etc. Perhaps not surprisingly, they don’t talk much about their project in Sierra Leone … “conflict platinum,” anyone?

Any more talk about that and I’ll sound like an idiot, justifiably so, so let me look at the some things that I do understand.

The research report that Badiali quotes is available on Jubilee’s website, you can [pdf file] find it here[3] if you’re interested — they have a price target of 294p on the shares, which would be nearly a 300% return from today’s price.

The shares did have a massive run up of at least 85% in the first half of this year, but recent weeks have seen the completion of the curve — the shares are below 80 pence and nearing their low for the year, after highs in the 125 pence area back in July. The Minesite page for Jubilee[4] has some more description of their data (submitted by the company or by their broker, I’m sure, so supply your own grain of salt).

As recently as last month, speculation was that the company might be taken over, or might sell their biggest project, the Tjate area in South Africa’s Bushveld. One consultant speculated that the Tjate project might be worth $400 million on its own and, at that market cap, generate a 22% annual return.

From what little math I’m capable of, it appears to me that they have about 75 million shares outstanding and a share price of about 80 pence, which puts their market cap at just about $120 million dollars. Not sure how much debt they have, and I’d check that math if it matters to you, but certainly 120 is much smaller than 400. Right?

And certainly, the “$3 billion” potential Badiali notes is also significantly larger than 120 million.

The company CEO described his options in a Minesite article as “Carry on. Consolidate in the junior sector. Get taken out by a big buyer.”

Of course, I have no idea which of those final avenues they might pursue … or whether all are even feasible after the recent collapse of the share price. The share price fell significantly at the same time as they issued more shares to increase their holdings in Tjate to about 58% (had been around 48%). I don’t know if there are other reasons for the fall in share price, though it’s easy to speculate that the fall in commodity prices and the general malaise in financial markets have had something to do with it, particularly for a company that has (or had) a significant likelihood of being a takeover candidate at some point.

So … a beaten up junior platinum explorer/miner with a site smack-dab in the heart of platinum country, that’s far from making a profit, with perhaps a surprise profit potential in their holdings on “Mystery Island.” I have no idea whether it makes sense to invest in the shares at this point, especially given the very fast fall they’ve seen in the last few weeks, but it certainly seems that Matt Badiali and the folks at Ambrian, among others, are big fans.

I think I’ll likely be content to keep my indirect exposure to Jubilee through Ambrian for now and not delve further into Jubilee Platinum itself, but I’m sure we’d all love to hear from you if you’re digging deeper — especially if you know why the shares tumbled recently from their peak. Happy Investing!

  1. Mining News article that Badiali quotes about Madagascar is here: http://www.theminingnews.org/news.cfm?newsID=1505
  2. Stansberry and Associates recommendation from April: http://www.stockgumshoe.com/2007/04/jack-morgans-single-best-investment-for.html
  3. [pdf file] find it here: http://www.jubileeplatinum.com/releases/ge_research_110607.pdf
  4. Minesite page for Jubilee: http://www.minesite.com/companies/comp_single/company/jubilee-platinum-plc.html

Source URL: https://www.stockgumshoe.com/reviews/s-a-resource-report/mystery-island-9000-miles-off-coast-of/

  1. Avatar
    Aug 20 2007, 08:39:00 pm

    Speculating on unknown acres without better info makes me wonder about matt the geolists credibility.
    Hey guys, had you bought range resourses at .001 last friday would have made you a multimillionaire with only $1000. GI

  2. Avatar
    Aug 20 2007, 09:17:00 pm

    9000 miles off of the coast of Florida? Was that East or West coast?

    They might have just as well said ‘somewhere on the face of the planet Earth’ since 9000 miles radius is what, maybe 75% of the worlds surface.

    Talk about spin! Whoever thought that description up must have formerly worked for the ‘war on terror’ publicity department:)

  3. Avatar
    Aug 21 2007, 08:00:00 pm

    Good point Ryeford. My etrade site showed about 16,000.This could have been “carpet bombing” short selling driving down the bid, then buying it back, thereby doubling the take.Food for thought. GI

  4. Avatar
    Aug 25 2007, 08:34:00 pm

    Any idea? This S&A correction stock be a triple digi
    #2. Buy gold and other precious metals investments

    The one thing the government can and will do in this type of market environment is create more liquidity—they’ll make borrowing easier.

    And, in essence, create more cash.

    You’ve seen this already in the surprise Federal interest rate cut last week. That move is probably only the beginning.

    You see, precious metal companies typically do incredibly well in this environment.

    As Forbes just wrote on August 20, 2007 in an article called “Federal Reserve Could Start A Gold Rush”:

    “The Federal Reserve is mulling a federal funds interest rate cut; a move that could buff the luster of gold miners. RBC analyst Stephen Walker says that gold equities have charted significant gains during rate cutting cycles by the Fed…”

    And we believe we are still at beginning of a big precious metals bull market.

    As you probably know, commodity precious metals have nothing at all to do with subprime mortgages, or exotic credit derivatives…

    With gold at around $650 an ounce today, Bloomberg reports: “Gold may reach $2,000 an ounce by 2010.” And Michael Lynch-Bell, head of mining and metals at Ernst and Young, says the potential is “virtually limitless.”

    Consider this: Since 2001, both gold and silver are up over 100%…

    The right precious metals stocks have done even better.

    There are simply too many to name… but some notable stocks have made investors a lot of money since 2001—such as Southern Copper (2,303%), Silver Standard (1,554%), and GoldCorp (325%), to name just a few.

    Our resident expert in precious metals stocks is Matt Badiali.

    Matt—a geologist by trade—is the lead analyst of the S&A Gold Report. In the time Matt has been following the commodity metals sector, some readers who bought his recommendations have written in to tell us that they made very good money…

    Among the precious metals companies Matt has recommended are Seabridge (159%), Southern Copper (119%), Cumberland (93%), and Zinifex (76%)…

    So we asked Matt to tell us the #1 “correction” stock he would recommend right now…

    It’s a remarkable business that allows you to buy gold for just $72 an ounce (Remember: The price of gold today is over $650).

    And while shares trade right here in North America, the company’s biggest mining project is in a country where they are the only company that’s gold mining here.

    In other words, this company—like Dan Ferris’ favorite “correction” stock—has a huge “moat” of safety around its business.

    As Matt puts it, right now this small gold stock “trades at levels that could hand us a triple-digit winner this year.”

    If you want to protect some of your money from the current correction—however long it lasts—the small gold company that is Matt’s #1 favorite “correction” stock is a great way to do it.

    Even better, you have the opportunity to make potential triple-digit gains, in a valuable, in-demand resource.

  5. Avatar
    Aug 26 2007, 09:23:00 pm


  6. Avatar
    Feb 14 2008, 08:52:44 pm

    ~Dos any one subscribed to the MATT special Report, Nevada Royalties: A Lifetime of Income from the World’s most Profitable Gold Mines? I just want to find out if this information is genuine and dos any one make any profit from this information? Can any one explain about the Nevada Royalties? I just what to investigate this info before committing my self to pay for subscription. I would be very grateful for any useful information!

  7. Avatar
    Mar 1 2008, 07:18:00 pm

    I too would like to know more about the Nevada Royalties: A Lifetime of Income from the World’s most Profitable Gold Mines the teaser from Matt’s special report. Any validity to what he’s talking about?

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