“Buy Them Before Barrick Does”

By Travis Johnson, Stock Gumshoe, February 26, 2008

This one comes in from Jason Hommel of the Silver Stock Report, and several readers have asked me to take a look. He has a free email newsletter that you can subscribe to if you’re interested.

In addition to that free newsletter that he offers, he will let you take a peek at his personal portfolio for $50 a month. OK, $49.95.

Now that’s a good racket — he doesn’t even have to write anything witty or wise? The Gumshoe has to look into this. Anyone wanna see my portfolio? For a beer, if $49.95 a month is a bit steep? Not to turn you off, but I’m afraid that I’m pretty much just tracking the S&P for the last few months.

But anyway, in the last email he sent out on February 21st he mentioned that he had a particular stock in mind that was in his portfolio, as one that should be bought before a major miner buys them out. It’s a gold and potentially copper miner, and he intimated that Barrick was on the hunt though didn’t specifically say that Barrick was likely to buy this specific company. Unless you read between the lines, where the really good stuff usually is.

We don’t learn too much about this one, but here’s what I’ve got:

One junior gold miner has moved from a new exploration to production inless than two years, which is a phenomenal achievement for such a tiny market cap of a paltry $9.5 million.

The stock trades at $.50 per share.

“They are producing over $1 million of high grade 1/4 oz./tonne gold annually.”

And …

“They just started shipping gold this January. But it’s their copper discovery that caused me to buy the stock. They hit 41% copper over 27 feet! They have not yet begun to process the copper, but when they do, I expect this stock to move up significantly. The real benefit here is that this company is not likely to dilute the shares to expand production; since they are making money now.”

So … not a whole lot of text to the teaser, but enough clues that the churning Thinkolator can spew out an answer for us … which is …

Coronado Resources (CRD on the Venture exchange up north, CRDAF on the pink sheets).

It’s not at .50 cents any more … I assume it’s the influence of this teaser email or of the actual recommendation, but the stock bumped up right after this email went out from .50 a share to about .75. I don’t know if it’s likely to come back down in the next few weeks, but these microcaps that get a newsletter boost often do retrace their steps.

Coronado did indeed get it’s first payment from production at the Madison gold and copper property just last month, and I”ll take him at his word that it’s unusual to generate income from such a new holding (they have been working on it only two years). To be fair, though, this is not a new minesite — this is a rejuvenation of some older mines that were active for decades up until the 1950s or so … I presume that the whole $900 gold/$4 copper thing made everyone remember the mines were still there.

But really, if you want to read more about this one, you can just go check out Hommel’s article about it from November of 2006 — apparently he was a bit early in getting on board this one, so the recent spike up in the price still hasn’t quite gotten it to where the shares were trading 15 months ago. The shares really got their big burst about two years ago when they started working on the old Madison minesite, but have since traded between about .50 and 1.50 — driven, I imagine, by mining results and news.

Again, as with so many of these mining and resource stocks, I don’t know anything special or secret about this company and I don’t know whether it’s worth a gamble — if the resource experts among the Gumshoe faithful want to chime in, I’d be more than happy to hear their opinions.

But I do know that this is the stock in Jason Hommel’s portfolio that he currently believes is worth $50 just to hear about. Maybe it’s worth it, maybe not, it’s your money so it’s your call. I don’t know enough about this one to invest in it, and I don’t know enough about Hommel to pay him for anything, but I’m happy to at least keep an eye on some of his free stuff and teaser stocks.

Happy Investing to everyone in Gumshoe Land.

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