“The Mother Lode Adventure: How to make a Fortune From Yukon Gold. “

By Travis Johnson, Stock Gumshoe, December 12, 2011

I wrote recently about the teaser for Matt Badiali’s S&A Resource Report that pitched “the end of Silver” as the world runs out of that metal and prices are forecast (by him, at least) to skyrocket.

But in that same teaser ad there was a brief hint about Badiali’s Yukon gold stocks, and so readers have been writing in to ask for answers on that one. It turns out, I think we’re looking at a stock that was also pitched by Badiali way back in February, so I’m appending this note to that original article so we don’t lose all the reader comments at the bottom.

The current pitch from Badiali is:

“… the reason I trekked all the way to the Yukon was to meet with the CEO of a tiny $3 company who may have a larger gold find than the company bought out by Kinross.

“I can’t go into too many details about the company here, but I can tell you that they’ve already located over 1 million ounces of gold and they’ve only drilled on 10% of their property.

“In other words, they still have 90% of their property to explore, which is why I wouldn’t be surprised to see you make hundreds upon hundreds of percent from this tiny firm.”

So the hints are slim — $3 company, over a million ounces, only explored ten percent of their prospect. So who is it?

I think, from those clues, that Matt must still be teasing … Kaminak Gold (KAM in Toronto, KMKGF on the pink sheets). There are some other possibilities — ATAC Resources, which Badiali nicely rode up from a couple dollars to over $10, is now back down to the $3 range, but doesn’t yet have resources of over a million ounces. Actually, Kaminak doesn’t have that official resource either — though analysts have thrown around everything from 1.5 million to 3 million for their potential gold resource estimate at the Coffee Project. ATAC’s is a lower-grade project, from what I’ve read, and doesn’t seem like it will ramp up to a million ounces in the near term, but I could be wrong about that … I also haven’t looked into why ATAC has fallen so much more dramatically than most of their brethren this year.

Kaminak’s official resource estimate filing is expected to come soon — they noted in their most recent presentation that it should come in the fourth quarter, though there are only two weeks left for that to actually happen so I wouldn’t necessarily hold my breath … still, I imagine we’ll see it within the next several months. After that resource estimate, which should shake the tree for the whole Yukon neighborhood where lots of “derisking” of potential projects is needed, the next potential news would probably be either more funding, some sort of takeover as is repeatedly speculated for most of the Yukon gold names, or the drilling news that could come early next year as they resume drilling in the frozen north.

And there are a half dozen other fairly prominent Yukon gold juniors looking for the source rock of the Yukon gold rush, but none of them that I’ve found match these clues as well as Kaminak. So we’ll call it another “probably” match, not a lead-pipe cinch.

And yes, Kaminak was teased by Badiali back in February — when it was just under $3 a share. In the intervening months it shot up to about $4.50 during the height of the gold enthusiasm, but has now fallen back substantially below three bucks, last traded around $2.25 (market cap of about $150 million).

There are some things to like about Kaminak, to be sure — they have a pipeline of a dozen or so projects and properties outside the Yukon that they’re trying to sell or partner in order to raise money to focus on their core Yukon project, the Coffee Project, so that provides some resources for the expensive exploration work (they’ve just optioned off their Michigan potash project, for example).

They’ve also done some financing this year to fund their drilling programs, but from what I can tell the drilling/exploration news has been neither spectacular nor disastrous since February. The interest in M&A for Yukon gold companies seems to be heating up a little bit with the precipitous decline in many of their share prices, as noted in this recent Reuters article, but most of these companies are still many years from possible production and will require lots of financing and infrastructure investments to build large mining operations — or, as I expect most of them would like, they’ll require partnerships with big, cash-rich mining companies (after the Kinross/Underworld deal last year, investors are pinning most hopes on takeovers for the juniors like Kaminak).

So that’s the quick and dirty update, and our updated guess that Badiali is still teasing Kaminak …

  • What follows is the original article I wrote about the tease back on February 22, 2011. Please note that I have not updated or changed or revised any of the article below this point, though my disclosure remains the same (I don’t own shares of Kaminak or any of the other Yukon goldies). The comments on the original article are still also below, and you can feel free to add any updated thoughts if you like.

Matt Badiali has been pitching the next iteration of the Yukon gold rush this week in ads for his S&A Resource Report that tell the harrowing story of how he risked his life to get this info about a gold penny stock that he thinks will jump 390%, and the questions have been pouring in to Gumshoe HQ … so let’s get some answers, shall we?

If you’re at all interested in junior gold miners, you’ve probably heard stories about the Yukon over the past year or two — there have been some notable discoveries, and the story of Shawn Ryan the hardscrabble prospector is hard to resist. Ryan has spent years staking claims in the search for the “source rock” for all that gold that was panned from the Yukon’s rivers in the first gold rush over 100 years ago (lots of gold was found, but they apparently never found the huge underground deposits that birthed all the nuggets found in the rivers).

Badiali has also made at least one good recommendation among the Yukon gold explorers before — he got his readers in to ATAC Resources a while ago, so the hope and promise, I suppose, is that his next idea will be as lucrative.

So who is it? Well, apparently this is the second company that has made a deal for some of Shawn Ryan’s staked claims — the first one was Underworld Resources, and we’re told they’ve made great discoveries and have had a nice stock run already (I didn’t check on that one — time is short this week, so I’m making a beeline for our solution — if you want the whole spiel, including Badiali’s tales of death-defying flights in small planes, you can check out the ad here if you like).

But to our search: Here’s the spiel about the second company to make a deal with Shawn Ryan for the next great Yukon gold discoveries, with a few clues squeezed in to get us going:

“The company working on Shawn Ryan’s leaseholds has already located 8 major discoveries in just the first year of drilling.

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“A company press release stated, ‘Drill testing of soil targets in 2010 resulted in several high–grade gold discoveries…’

“Amazingly, they have a 100% success rate when drilling for gold on their property, which is unheard of in the mining industry.

“But as 20–year mining expert, James West says… ‘[The company’s] project exhibits an almost identical, and very compelling, geo–chemical signature to the one that led to Underworld’s gold discovery.’

“And, remember, Underworld made investors a quick 970%.

“Altogether, the company’s 8 discoveries are estimated to contain around 1.5 million ounces worth of gold – the same amount of gold Underworld found!

“But that’s not even the best part:

“The initial 8 gold discoveries occurred on just a fraction of the company owned land – 90% of the property remains unexplored.

“In other words, this company’s operations are still in the very early stages of exploration and production. And that’s why the company’s share price is still so cheap. However, once word gets out to the investing masses I think you’re going to see this small company’s share price soar in the coming months.

“Better still, this company has no debt, $25 million in cash, and as the CEO says, ‘[We’ve] started to plan a much larger exploration program for 2011.'”

What else are we told about this little stock? Well, that’s probably quite enough for our mighty, mighty Thinkolator, but we also do get the tidbit that this is a $3 stock … so who is it?

This Yukon explorer must be … Kaminak Gold (KAM in Canada, KMKGF on the pink sheets)

The quote from James West is from his Midas Letter, you can see his full article about Kaminak here — do note, it’s from 2009 so some of the info is out of date.

And it is a $3 stock, roughly — market cap is about $200 million, so it’s small but not ridiculously so. It is small enough, certainly, that either Badiali’s large subscriber list for this inexpensive newsletter or today’s mention in this space could certainly cause the shares to jump, so do be mindful of that.

They do have projects in several other provinces, but the focus does seem to be on their “white gold” site, as far as I can tell their lead project is the Coffee Project — their updates and 2011 drill program are listed on their website here.

And if you’re looking to me for info about whether their projects are worth $200 million or more … well, you’re probably looking in the wrong place. I’m very far from being an expert at mining or mine economics, they do seem to be in a “hot” mining area, at least, and I know that many of the newslettermeisters who I follow are talking up the Yukon in a big way, so discoveries and good drill results in that area are definitely piquing the interest of investors.

They recently announced that they have a $15 million exploration budget for the first phase of this year’s drilling, and they raised another $10 million just this month to go along with their $21 million in cash … so it sounds like they probably have enough cash to move forward with this first phase and also with a second phase of drilling before everything freezes up again late in the Fall. Drilling is expected to start in April, so I imagine we’ll get a fairly steady dose of news and results this year — and those results will go a long way toward determining the value of the shares, if they’re good and the gold price remains buoyant, I certainly wouldn’t bet against Kaminak … but, as I said, I’ve shared with you pretty much everything I know about the stock, and it ain’t much.

So, my merry Gumshoe mine-meisters — what do you think? I know a great many of you are far more in touch with the rocks under our feet than I am, and more conversant on the niceties of NI 43-101 filings — so if you’ve got some thoughts to share on Kaminak or any other favorite Yukon drillers, well, we’re all ears … the friendly little comment box awaits below.



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Dr Henry Sanford
Dr Henry Sanford
February 22, 2011 10:01 am

Dear StockGumshoe. I enjoy your comments and had spotted Kaminak and think it is a 'wait for the pullback' case now.
As a retired doctor, with a daughter, a junior doctor (UK), i am intrigued with the 'bio-seeds', mention in Sjugeruds blog. A panacea. It sounds ok (then teasers always do) and Harvard Med school, & CDC are serious people.
Any views?

February 22, 2011 10:12 am

Matt has been very successful and ridden the wave of resource recovery. I have owned KAM since he pitched it when it was $1.75. His research is thorough and compelling and provided readers with many winners.

February 22, 2011 10:12 am

Matt Rocks!been Alliance member for many years…highly recommend his Resource Trader. Buy up to 3.50