[ed note: Travis is off on a training ride today, so Myron Martin volunteered this teaser solution that he came up with for a bonus article today… we’ve edited it for clarity, but this is his work and his teaser solution to a recent pitch for Lombardi’s Profit Taker, whose recent ad promises “The Secret Gold Stock of the World’s Greatest Stock Picker”, for your edutainment… enjoy, and please comment at the bottom if you have questions or comments for Myron.]
Maybe this is something to celebrate. I am writing this on our 56th wedding anniversary.
The following teaser appeared in my in-box this past week from Lombardi Publishing, who announced the return of a man they have labelled “the worlds greatest stock picker” — and we’re told that his very first stock pick this year in the gold sector, already returned 625%. He had retired 3 years ago after being editor/analyst for Lombardi’s Profit Taker newsletter, and though they begged and pleaded for him to return, it was not until the gold market began to rally that he agreed to do so.
I recognize the name Robert Appel but I don’t recall ever reading his materials or investing on his advice, but here are some selective phrases from his pitch to renew his service.
He claims, “we are in golds 4th super cycle in which the metal could hit $5000 an ounce,” and gives his reasons WHY! For those so inclined you can see the original “teaser” ad here.
Lombardi’s pitch throws out past gains like .47 to $132, gains Robert Appel has made in the past, to get your attention… and introduces his new pick as a recent IPO also having a 625% potential gain.
Robert believes, (and I tend to agree) that the bottom of the gold market was reached in Nov. 2015, which is why he agreed to come back and resume his illustrious career in stock picking. He cites as his main reasons the world wide move to negative interest rates and the fact that “paper gold trading” now exceeds 293X the actual available gold for delivery. That caused him to withdraw from the market in disgust, we’re told, because the regulators were allowing this blatant manipulation to exist except for minor “slaps on the wrist” in the form of millions of dollars in fines, but no bankers have yet gone to jail, so far it seems the profits are so lucrative to them it is just a cost of doing business.
So what has changed? Robert saw the establishment of the Shanghai Gold Exchange as having a good chance to bring market pricing back to what it should be, price discovery by actual supply and demand fundamentals.
Robert’s focus like mine is on the junior miners, and as usual in these “teasers” his publisher throws out some pretty fantastic numbers, and states “the SMART MONEY is buying into gold hand over fist.” Potential gains are phenomenal, even potentially life changing.
The ad says that his new “below a dollar” stock pick with “near term production” has a “10 bagger potential within months.”
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Here’s a bit from the ad:
“Well, we’re looking at a tiny junior miner with the gold-producing assets of a giant. And I’m not kidding…
“This mine was owned by Barrick Gold for seven years, and it cost them over a quarter-BILLION-dollar investment…
“That includes all the infrastructure to get it ready for production. And it was just about to get started…
“But as gold slumped and hit bottom in 2015, Barrick was selling off its assets (some analysts said it was forced to).
“Including this one.
“In stepped a team of superstar gold vets who scooped it up.
“They didn’t pay half-a-billion, however. Not even $100 million or $50 million.
“They bought it for the FIRE-SALE initial price of just $2 million… literally pennies on the dollar.”
The mine in question was originally acquired by giant Barrick Gold (ABX) 7 years ago for $141.5 million, and they subsequently spent an additional $100 million on permitting and necessary infrastructure to bring it into production.
When Barrick got into financial trouble with some major projects that ran into permitting problems, it became a non-essential asset (as a relatively small mine in comparison to their major producing mines). Believe it or not, after an investment of over $240 Million in the super high grade project, Barrick sold the mine for just $2 Million (plus future profits from specified future production I will mention later).
While I recognize that Barrick is the largest gold producer in the world and is the darling of many institutions and hedge funds and a must for mutual funds, I personally don’t trust management or consider them shareholder friendly. At best I might consider option plays knowing those facts, it is not a stock I would want to own personally because I view management as having an “entitlement mentality” far more interested in feathering their own nest than rewarding shareholders.
This was cemented for me when I learned they paid an $11 million SIGNING BONUS for an executive they wanted, which I consider simply obscene, nobody is worth that kind of money at the expense of ordinary shareholders. That money would have gone a long way towards rewarding shareholders from the profits possible by a producing high grade mine, and there have been multiple mistakes like that to leave a sour taste in my mouth and put them in my bad books.
Putting that aside, I am happy to be able to pick up some of the crumbs from their table by their ineptness. Barrick Gold has sold numerous assets, you can Google “Barrick Gold sale of Papua New Guinea gold mine” and you will get loads of articles on their selling a 50% interest in their major mine in the country to the Chinese — remember, they had to raise many millions in capital to survive… but that still won’t give you the answer to the Lombardi teaser, unless you pay them the $995 they are asking for a subscription to the newsletter to get the REPORT FREE. WHEW what a deal.
That would take quite a slice out of the money you might have to invest in this stock directly… if you only knew the ticker symbol, a recent IPO. so how about FREE for members of Stock Gumshoe?
While I haven’t invested in it yet (and won’t for at least 72 hrs. after this gets published, per Stock Gumshoe’s trading rules), it turns out this stock was on my dozens-long list to research already… because that is what I do, I make it my business to KNOW what is happening in the sector at all times. In fact, when I can find the time to compile the figures on my selections for the past year, you might just conclude I am just as good a stock picker as Robert Appel.
Without further suspense, the stock being teased is K92 Mining (KNT.V, KNTNF OTC in the US), poised for production at the Kainantu high grade project in Papua New Guinea with all permitting in place, mill and tailings pond etc. all ready to go in a mining friendly jurisdiction.
Yearly production is targeted @ 50,000 oz’s from indicated reserves of 240,000 oz grading 13.3 gr./ton, plus another .84 M .oz inferred @ 11.6 gr./t., with lots of exploration potential waiting to be drilled to expand existing resources. The needed exploration is easily financed from near term re-start of production generating the cash flow required, preventing the usual dilution of early shareholders which means the risk level is much lower than most start=ups. Re-start expenses are more than covered by the existing $10.7M working capital in the treasury.
The management team consists of Ian Stalker, a Scottish born mining engineer and mining developer with 40 years experience in building and operating mines. He increased AngloGold Ashanti’s (AU) production by 10X during his tenure as Managing Director during the 1990’s. He was also CEO of Uramin (uranium) when it was sold to AREVA for $2.5 Billion in 2007.
Chairman Tookie Angus also had a successful mining career with Vantana Gold, (which I remember from many years ago) and Reservoir Resources which I owned for years and was taken over by Nevsun Resources, which I will be reporting on in my next regular column, since I now own it.
President Bryan Slusarchuk, an ex-Canaccord Broker, is helping the company raise more development money and tell the story. Alex Davidson, a former Barrick Executive Vice President, and Doug Kerwin, a former mine finder with the Ivanhoe Group, are advisors to the company, so they have a sound management team in place.
There is a realistic chance of a real big mine popping out of this small newly formed company, according to Ian Slater. Given the exceptional grades and the potential of the unexplored portions of the property ready to be drill tested it is likely to surprise to the upside.
Of course, as with any new mining projec, some execution risks always remain. They seem minimal at this point of development, but you should be aware of the fact that the deal with Barrick calls for payments of a further $60.M from future production, but given the huge money Barrick already invested to bring it to a production ready stage, it is still a real steal for this experienced new management team .
Cartesian Capital is k92’s biggest shareholder, and holds Net Smelter Return royalties on the initial pits to be developed, and in the first 36 months of production is scheduled to receive 18,000 to 20,000 oz’s of the gold production. Compared to the usual hundreds of millions that usually need to be raised to bring a new mine into production, this seems like a dream project in comparison.
Normally I would rate a “near production stage project” as worthy of 2% of your portfolio and I hope everyone will practice some restraint so everyone can get a piece of the action at a good price by being in early. If everything goes well you can always bump up your stake another 1or 2% in the usual summer doldrums once actual commercial production is announced. Don’t throw all your money at this one because my regular column that is almost finished will have another dozen or so projects to consider the end of the month, but this I considered a HOT immediate buy before the market at large even knows about this exciting project.