Hodge’s “Nobody Knows about America’s Biggest Gold Discovery” pick

What's being teased for 10,000% returns after the "EPA Green Light" by Wall Street's Underground Profits?

By Travis Johnson, Stock Gumshoe, April 6, 2018


This article was originally published on January 16 — the teaser pitch in question is still being actively sent and we’re still getting questions about it, so we re-publish it here for your information. It has not been updated or revised, the stock rose sharply in January around the time the ad started running, but has since been more or less flat.

Lots of questions rolling in this morning on the gold front… which probably shouldn’t be surprising, since gold has had a nice little run lately (up about 7% in the past month or so), and a rising gold price tends to get gold mining speculators a little hot and bothered, a state of affairs that is not missed by the promoters of mining-related newsletters.

Nothing sells a newsletter like profit lust, and it’s an even easier sell if you can manufacture the feeling that you’re getting in on something secret and special, just for you… which leads us to the latest pitch from Nick Hodge for his Wall Street’s Underground Profits newsletter (a relatively inexpensive letter, $99/yr). Here’s how the ad gets our juices flowing:

“Why NOBODY Knows About America’s Biggest Gold Discovery

“In this presentation, you’ll discover…

“The American deposit with 20 million ounces of gold — and why few have ever heard of it

“When news of this major discovery will be released to the public

“The tiny 50-cent-per-share miner with complete ownership of the mine… and how to buy in now for life-altering returns”

What more could one person want, right? Apparently it’s a stock Nick Hodge has been following for a while… more from the ad:

“I’ve spent the last five years studying this deposit and the tiny company that owns it….

“Officially, there are 6 million ounces of gold there now.

“Which alone makes it one of the biggest in America. But that’s just one part of the equation.

“This gold is…

“Cheaper to mine than almost any other in America

“One of the highest-grade forms of gold

“And incredibly easy to extract, with minimal environmental impact

“Plus, as you’ll see in a moment, approval for permitting is now virtually guaranteed.”

OK, so that’s a nice little crop of clues. Do we learn anything more about the stock from this ad? He does go on and on for a while… Hodge tells us the he has personally explored all 1,500 acres of the property, which is Idaho, that there’s “over three times more gold here” than the official reports say, meaning as much as 20 million ounces… and that this “tiny, virtually unknown miner has complete ownership” and trades for about 50 cents a share.

And, for one more clue — almost superfluous at this point, though we’ll toss it on the pile — we learn about one of the major backers of this mine:

“… billionaires are betting the house on this play!

“Like John Paulson….

“I’ve personally uncovered the billionaire legend’s NEXT big bet…

“A bet unknown to the financial media.”

There’s more to the hinting, as Hodge lays it on pretty thick — he says that the permitting process will be smooth and easy because the miner says it can actually improve the environmental disaster left behind by previous miners on this same site… and that the mine also can produce a “critical strategic metal” called antimony.

So that’s about all the hinting we can stand, and the answer is quite clear — the Thinkolator doesn’t even need to shift into second gear to let us know that Hodge is (again) teasing Midas Gold (MAX.TO in Canada, MDRPF OTC in the US) and its Stibnite Gold Project in Idaho.

Which is, indeed, a pretty large past-producing gold mine (several mines, actually), with a nice resource base of 4.6 million ounces in probable reserves across three locations… and they do indicate in their latest investor presentation that they think they have potential upside to increase those reserves meaningfully as they upgrade historical resources and do more drilling to extend the defined ore body.

And yes, it is an unusually high grade open pit mine… and even at five million ounces, it would be pretty big. And it includes meaningful antimony resources, which apparently are in demand largely because antimony is a key fire retardant.

And they do have some pretty good financing in place from Paulson & Co., though he was the backer of the financing and didn’t actually take all the shares into his funds. That C$55 million financing, from early 2016, is said to be at least sufficient to get them through the regulatory process and the feasibility study…. it’s also not on their income statement yet, since the financing was done largely through convertible notes that haven’t been converted yet. At the time, the exercise of all those notes was expected to create a share count of 317 million, and the actual share count is still reported at 186 million (that makes a pretty big difference to the market cap, as you might imagine — fully diluted and converted, the market cap would be about C$265 million at the moment, with the shares at 84 cents).

So… that’s what the company is trading at today — what’s it worth? Is it worth 10,000% more than that? That’s apparently what Hodge is pitching… here’s some more from the order form:

“Yes, I Want To Earn 10,000% Gains On America’s Biggest Gold Mine! ….

“Once details of this historic gold discovery go public… this 50-cent miner will begin a breathtaking ride.

“The kind not seen since Diamond Fields surged for 200,000% gains on its nickel discovery.

“And you have the unprecedented opportunity to buy in ahead of the crowd.

“Remember, I’m only privy to this mine’s real wealth because of my insider contacts…

“My boots-on-the-ground visit to the mining site in Idaho…

“And my personal conversation with billionaire John Paulson — the company’s single biggest investor….

“When this mine’s true reserves become public knowledge, the major gold giants will begin the bidding war of a lifetime…

“Driving shares up to $5… $15… past $30.”

Is that likely? I have no idea… it probably depends as much on the price of gold as anything else, but here’s what we do know from the company’s disclosures and filings so far, at what is still a relatively early stage in their planned development…

They expect permitting to be done within a year or two, with the biggest upcoming events being the draft environmental impact statement that’s going to be released for comment by the lead permitting agency in the next nine months or so, and the major decisions made roughly a year later, by the third quarter of 2019. They are concurrently working on the feasibility study, which would be used to get financing for building the mine and is likely to be complete sometime in the next six months or so. So there are things happening, and there has also been substantial additional drilling and exploration done which could change the economics of the mine when it is analyzed and include in that next feasibility study, but I don’t see any critical news anticipated in the next few months — this coming Summer and Fall should be pretty news-heavy for Midas.

They do have a prefeasibility study (PFS), so that’s the easiest data on which to base your assessments of the value of the project — the 2014 PFS included a NPV at a 5% discount rate of US$832 million, or about $2.60/share… which sounds pretty good compared to the $0.70 share price. So why is the stock trading at such a steep discount to that “net present value?”

I don’t really know… this is a prospective mine developer, so the possible issues are legion. The regulatory prospects are presented as very optimistic by the company, but perhaps investors are more skeptical on that front…. the net present value figure is calculated on a pretty low discount rate for a relatively risky enterprise (though that’s not unusual)… the estimates were made at a time when silver prices were much higher, so lower silver is likely to drive that down a little bit (though gold is by far the most important driver)… the economics of the mine got less attractive in the years between the preliminary economic analysis in 2012 and the prefeasibility study in 2014, and investors hate to see things moving in reverse… the site is relatively complicated and expensive to build, mostly because it’s three separate open pit mines. You name it, none of those things are obviously insurmountable problems, but you don’t have to dig very deep to find possible problems and risks in a mining company.

So we’ll know quite a bit more when the real feasibility study comes out, presumably later this year, and the expectation is that they’ll be adding some reserves to that study. Then they’ll have to get funding, a process that will be influenced by the permitting process (including any stipulations about how much of a recovery bond they have to post, given that the site is already a mess and getting that mess cleaned up eventually is a big part of the non-economic rationale for building another mine there). They’ll have to raise about a billion dollars, assuming that the PFS capital cost estimates were at all accurate, so whatever the sentiment of mining financiers is like at that time will have a lot to do with how quickly or happily the project proceeds.

They have already sold a royalty, so Franco-Nevada is on board with a 1.7% royalty stream from the Stibnite project that they bought for $15 million in 2013… which is a nice little indicator of what the project was valued at at the time, and how Franco-Nevada assessed the risk, and a reminder of how powerful a good royalty company can be.

I own Franco-Nevada shares, so I took a quick look at the math… if Stibnite is built and operates as the PFS predicts, it would generate about $7.5 million a year in cash flow to Franco-Nevada, returning their investment in year two and generating pure profit for a decade (or more) after that. The risk? Beyond the risk that the mine might not get built, of course, they risk time — they paid the cash up front in 2013 and likely won’t see any return until the early 2020s at the earliest, depending on how long it might take to build the mine and start mining… but if the project works out well or becomes far larger, as Hodge implies in his tripling of their reserve base, then that $15 million could generate 1,000% or more in return for FNV. That’s why FNV trades at 20X revenue and has outperformed pretty much every big gold miner over the past decade.

But Franco-Nevada won’t double in a week if there’s exciting news, and a junior miner might — so little guys like Midas Gold are certainly a delight for those who enjoy a little adrenaline with their investing. I don’t know how it will work out, but I can see how the large gap between the net present value of the Stibnite project and the current market valuation would make a junior mining enthusiast want to investigate further — maybe there are good reasons why the risks are high or the discount should be substantial, but plenty of junior mining stocks trade at much higher valuations than Midas relative to their prefeasibility net present value estimates.

The ads I’ve seen running this morning scream about how the shares will go “Vertical After Trump EPA Green Light,” and perhaps they will… but the verticality of the stock currently is being caused by the newsletter ad campaign, not by the EPA. The lead agency in the permitting process for this project, which is the US Forest Service, not the EPA (the USFS controls the site), is expected to be at least a year and a half away from making a decision.

So I’ll leave you to it, dear friends — as you can probably see from the current share price, the low cost of the newsletter and the relative ease with which the clues could be sifted in this case combined to put a lot of buying pressure on the stock as Hodge’s group has blanketed the e-waves with this teaser ad… that kind of surge in volume from promotional attention doesn’t tend to stick, but we can’t know for how long the ad will run or whether those speculators who jumped on the shares this morning are likely to become committed long-term shareholders. We can just caution that such surges tend to be temporary, and the market’s pre-existing assessment of the stock tends to return once the promotional barrage has faded… but the market is built on what each individual thinks about each company, so I’ll leave it to you to suss out your opinion on this one, please do let us know how you weight the scales with a comment below.

P.S. We’re always trying to collect investor opinions about the newsletters they’ve subscribed to — so if you’ve ever tried Wall Street’s Underground Profits, please click here to share your experience with your fellow investors. Thank you!

Disclosure: As noted, I own shares of Franco-Nevada, and I own some gold and silver. I do not own any other investments noted above, and will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.


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39 Comments on "Hodge’s “Nobody Knows about America’s Biggest Gold Discovery” pick"

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david
Guest
0

maw toronto
mwsnf usa
I am buying more

marora2017
Irregular
5

is current price a good buy?

clauschris
Member
6

Same here. MAW is drilling in Northern Finland at the moment. Looks promising to me.

marora2017
Irregular
5

current price is 0.69 cents.. is it still a god buy?

Rusty Brown in Canada
Guest
0
Rusty Brown in Canada

I think you mean 0.69 dollars or 69 cents. An amount of 0.69 cents per share would be less than 1¢ each.

Leo
Guest
0

Up on MDRPF about 75%.

JayBee
Guest
0

From $.44 to $.70 in the past five days. Nick Hodge is the King of Pump and Dump, so buyer beware.

Rob
Guest
0

Always get bombarded with wealth daily emails via nick hodge and always do due dillegence review myself. Yeah the hype and rush to buy is a result and my suspicion is always ad , buy and dump background to it . Might be a trival unfair on them, but gut says I will watch the play until late year

georai
Irregular
65

Great time to promote a gold based penny stock. GOLD up, GLD up, JNUG up.
The volume on MAX is extremely sparse. It would be very easy to get trapped.
Best to reduce risk and use one of the gold ETFs mentioned. Good volume, Good Price Increases. Less risk.

takeprofits
Guest
0
A little late on this one, had my article on it about half finished when I cam across the article by Travis, and he didn’t miss much, but I can confirm that he is correct in his identification. Since Hodge says “almost NOBODY knows about this stock” I must be a nobody since I have known about this stock for a long time, it is just one of several DOZEN in that price range that I watch for a good entry point based on a catalyst in development. In this case in spite of not wanting to “front run” I… Read more »
ted edwards
Guest
0

JoinWhat is going on Who do you trust ? I am from Australia I would prefer to spend my $99 buying some 50 c shares than on paying for where to buy the shares can someone please advise me Where can I buy the shares and where do I send the money and what is the name of the mine and the shares please??? ted

Gr8Full!
Irregular
11174

$MAX.TO https://web.tmxmoney.com/quote.php?locale=en&qm_symbol=MAX

$MDRPF OTC http://www.nasdaq.com/symbol/mdrpf
#InterActiveBrokers.com $1 trade, $6Fee

Most recent article at stockgumshoe.com
https://www.stockgumshoe.com/most-recent/ Thx Travis!

First Steps shall support NEW investor’s # knowledge
https://www.stockgumshoe.com/2014/11/first-steps-and-favorite-tools-for-new-investors/ #Best2ALL!

Rennet Namron
Guest
0

The deal I like is PRO coins. Lean more at http://www.discoveripn.com, then http://www.freedom4me.ipronetwork.com/join I think you’ll quadruple your money faster this way than on any gold mine stock.

William Cosgrave
Guest
0

Rennet,
I want to join ipro. But I need your info to sign up.
Sincerely,
William Cosgrave

takeprofits
Guest
0

Did you not read the article? Travis is correct, the stock is Midas Gold in Idaho, If you can’t buy on American or Canadian Exchanges on your present Australian brokers platform then your best bet is interactive brokers. Stock has already moved up nicely from where it was when Hodge first wrote about it, so a pullback is certainly possible.

saint stephen
Guest
0

I made money on this stock before, and I anticipate making money on it again. It’s a good mine with a lot of gold in the ground.

dougj34
Irregular
279

In all fairness this is not a mine yet saint stephan, it is an exploration project an established royalties/streamer has a stake in. Who will build the mine is an unknown at this point, I say that with confidence a mine will be built but there are more than a handful of hurdles to jump. I have made a few bucks on this one in the past also. I had no clue re the boost SP had today or I would have had a few shares in queue, will see what tomorrow brings. Best.

saint stephen
Guest
0

Hodge’s best pumps usually result in sizeable upticks that fizzle in a week or two. The key is to get in early, the same day the pump hits the net, in the morning is best, watch it closely, and when it’s over 50% in gain, dump it before it slides.

BILL
Guest
0

Wow what a great retort you supplied on this Mining stock and tentative project if you don’t mind I’d like to retain some of the information you’ve supplied and certainly look forward to your opinion on other value-added opportunities

Add a Topic
1189
Oscar Blob
Guest
0

I just read Hodges bumph so your comments were a very helpful insight putting things into perspective for me.. Thanks for that. Think i’ll keep my powder dry for the time being. Regards

kevin5301
Irregular
0

Mr. Hodge did some pumping last night and today the stock is up 11%. I was blasted with two emails pimping the stock last night. He probably bought again on Friday after it went back down all week and dumped it today again after pumping it back up. Works until it don’t. Then he’ll find more stocks to do the same.

tromans
Irregular
11
This was tipped by Jim Rickards as one of his recos in his 3k yearly newsletter which I joined with a trial in mid 2016. I bought several of his ‘hot’ tips just as the steam went out of the gold price. Every one has gone down by at least 50 or more %. I unloaded some after I cancelled the newsletter after about 9 months but did my own dd on MAX and decided it was one worth holding on to. KL by the way is the only one that he tipped that has gone up since I bought… Read more »
TexasStockman1
Guest
0
Just recently got back into gold. Not a fan of ETFs so these types of posts help me a lot. I know you guys get complements on a regular basis but I to tell – you and your research are amazing. With your non-emotional and unbiased research I go to this place whenever I want a true picture. This is probably the best site I can recommend to an new investor or an old one tired of the hype brigades that have little truth and lots of agendas in what they put out there. I expect gold to run for… Read more »
Leonardo Pisano
Guest
0

Just discovered this website. Very happy I found it!

FWIW, the Hodge’s ad movie has in the beginning one of the interviewed showing a cap with Midas’ logo exposed … I am always suspicious if the disclosure of the company is too obvious.

Kathy
Guest
0

Why do so many of these teasers recommend Canadian OTC stocks that cannot be traded in US?

DONALD NOVOTNY
Guest
0

Check out MDRPF OTC USA

Nick
Guest
0

My experience with Nick Hodge was not good. He put out a similar report for a company mining a different metal and the very next week, the company reported disastrous news and the stock crashed losing most of its pre-Hodge pitch value.

Steve Johnstone
Guest
0

Hello
What is the ticker for this mine please

James krolly
Guest
0

How do i buy in on the 50 cent stock on the mine

cd mcsmart
Guest
0

what a bunch of morons!!! as PT Barnum said about suckers “there is one born every second” and all of you seem to have been born in the same hour…

jerubaal
Member
4

I guess a guy can be pretty bravely offensive when he sits behind a keyboard. You don’t have to be rude to the people above. You could just point out why you believe this guy is a scammer.

saint stephen
Irregular
86

Check out his portfolio record. Sure, he has a few dogs, but he also picks some winners.

Dale
Guest
0

Where to locate his portfolio record? Link please if known. Thanks.

StockMidas
Irregular
135

I as a matter of principle do not read anything and delete anything related to Nick Hodge. I some time ago out of complete ignorance subscribed to one of his junior mining stock publications for ± $69, when I checked my credit card statement an amount of ± $750 was billed. When I queried it I was informed that I was subscribed to all his publications but that it was merely an administrative error. Ya well, of course ….

saint stephen
Irregular
86

I’ve noticed a lot of newsletters are pitching gold right now.

doc
Guest
0

if anyone is looking for a pure antimony play, do your due diligence on uamy

dealerdeb1
Guest
0

IF I invested in every Junior miner touted Id be broke but richer if I bought Franco Nevada instead.

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