Thom @ Large: Actionable, Mathematic

Type:  Thom  

TIBURON, California -- Adding: special situations in accelerated time lines. Subtracting: resources I never understood in the first place.

Note: Several of these prospectors/miners (and one drug developer) investments are BabyBulls.com and Torrey Hills Capital clients. Others are not. This article is actionable, even against a dim landscape for metals equities.

-- I am throwing in my mathematical towel on Gold Canyon Resources (Canada: GCU). I lost a lot of money on this Ontario gold project developer. I wanted to believe in this thing after I spent time on the road with Quinton Hennigh, the PhD. geologist who is connected to several speculative gold prospectors. But I never visited the Ontario site of Springpole, the gold and silver project about 100 kilometers from Red Lake. This was before my public vow never to sink a penny into anything unless, as Concordia Resource CEO and geologist (and longtime confidant) Edward Flood puts it, I felt the rocks "hotting up your toes."

Takeaway: Gold Canyon's revised resource estimate in February underwhelmed the market. The stock's horrific fall started about a week before the resource estimate was unveiled in late February. Clearly a case of a company, one of many out there mind you, with way too much stock trading in the open market at a time when way too little demand exists for metal equities.

-- That same brutally consistent arithmetic of too much CUSIP and not enough Cuddle applies to Calibre Mining (CXB in Canada). I actually made a little money on this after holding the Nicaragua gold-copper developer's shares for close to three years. A fund manager I respect told me to sell all of the shares when the stock went parabolic earlier this year -- caught in the current of rich copper and gold assays at its Primavera joint-venture project.

Takeaway: I sold a little less than half in the January run-up, none of it at the top. Sometimes, I get the feeling that asset managers hinge all of their selling, profitable and otherwise, on events (assays, new contracts for land packages, etcetera). Congratulations to Felix Pinhasov for hitting the copper nail on the head; Felix pointed out in an online article that Yamana (AUY), a Calibre shareholder, had dispatched 9 million of its 12 million shares not long after the stock tripled (January-February).

-- I am a recent buyer, or shall I say adder, of shares of Mali gold prospector African Gold Group (AGG in Canada). The special situation in AGG's case is that Mali, which I have visited three times, in unlikely to collapse in anarchy after a warlord's (idiotic term -- like saying lord of war) government takeover. Yes, I own Michael Nikiforuk's stock at prices far higher than its battered 22 cents. But then, so does Pinetree Capital and other resource merchant banks and professional investors.

Takeaway: In my conversations with geologists and executives at the Kobada project, Kevin Downing and Pierre Leland among them, I am satisfied there is no threat to African Gold Group's operations. West Africa is for the most part mellow and industrious. Witness project/prospect generator (another idiotic term) Concordia (CCN) in Burkina Faso, for example: industrious and consistently releasing assays for Mr. Flood's company, which is active on three continents. The same can be said for select operators in Ghana, the African continent's longest-standing democracy. I believe this one Malian worshiper of war got lucky after returning from selling his services in Libya. We likely will see other mercenaries "get lucky" in West, North and Central Africa.

-- I recently doubled my holdings of Colt Resources (GTP in Canada) after seeing the company's gold and tungsten projects in southern and northern Portugal, respectively. Colt wrote two tickets earlier this week to raise about $8 million from new investors and existing, mostly European, shareholders. The special situation in Colt's case: a fresh resource estimate designed to confirm approximately 600,000 ounces of gold almost surely will far exceed that amount. Hopefully by June. Also, I expect that Nikolas Perrault, the Quebecois CEO of Colt, will succeed in negotiating a pact with a French, German, Polish or other tungsten interest for the property in the north. My average for the shares, all non-margined as is my custom, is about where the stock is now: 53 cents Canadian. Please see my write-up of Colt at Cambridge Cafe. Photo: Gold Project at Boa Fe, near Evora, Portugal.

-- Adding: Gold Standard Resources (GV in Canada) deserves special attention for its situation at Railroad near Elko, Nevada. I have been purchasing shares since November 2011. David Mathewson, the geologist, is steering the tiny prospector to a Carlin Deposit-like trend with vast potential, tens of millions of ounces. I am a believer and have been seen visiting Jonathan Adwe and his team in Nevada some 17 months ago. The next round of assays just might point to an undeniable "feeder zone" for the mineralized rock. We'll see. I know a bunch of folks waiting on that event, including largest individual shareholder Carl Pescio, an Elko geologist whose properties formed Allied Nevada.

-- Holding steady: I have never been so right, then so wrong, and I hope so right about a company as I have been with Avanti Mining (AVT in Canada.) I think I have owned this one for going on four years now. At one point, after visiting Avanti's Kitasult molybdenum and copper project, I boosted my stake to about 1 million shares, fairly cheap prices, too. The stock tripled, I sold none on the way up. And then delays in rounding up the $600 million or more of financing for a new moly mine punctured AVT. A Denver group owns about half the shares now. This week, C.J. Nelsen and A J Ali unveiled a tentnative financing plan with the names of four legitimate lenders. Mr. Nelsen, CEO, says, "It's taken a long time, but for a $40 million market cap company to get a mandate to raise $640 million in debt and is testimony to the quality of Kitsault." I sure hope so. Mr. Nelsen and Mr Ali deserve better than a 15-cent stock, and one day, as moly's specialty steel qualities boost its price and Kitsault comes on line, I think they'll get it. Both have been rabid buyers of the shares in the 10-cent to 12-cent range.

-- The biotech company? Biocryst Pharmaceuticals (BCRX). Yet another example of a company whose special situation I nailed on the head … yet I failed to see the wisdom of selling the shares several years ago, when the stock went into orbit amidst avian and H1N1 flu concerns. I slowly have been purchasing shares again. The Nasdaq-traded stock is acting lively, with plenty of activity in the past three or four weeks. Zip news but lots of speculators thinking BioCryst finally will announce a big-pharma partner for its Phase III human trials of a gout drug and maybe a leukemia drug.

That's all for now. I will be touring two gold companies in my beloved Colombia in mid-May. One of them is my largest holding. Oh, and I will be speaking at Joe Martin's Cambridge House resources conference in early June.

Conferences are a tough sell in this garbage metals equities market. But the Cambridge June show, like its twin edition in January and Mr. Martin's Silver Summit in the autumn, is free, or practically free, and worth the flights. That is, even if the Canucks fail to advance in their Vancouver hockey games. In terms of conferences, execs and investors are always asking me what makes sense for a sensible company with real potential but concern about future funding.

Well, aside from the free Joe-shows in Vancouver, Toronto (September) and Montreal (November), the ones that cost attendees big money for admission and exhibitors big money for setting up shop are rarely worth the price. The companies find it is almost impossible to quantify how many new stakeholders they gained ... or lost. The attendees have to put out $500 or more per head, and the fancy Florida or Colorado or London hotel and the airfare run another $2,000.

Most exhibitors and attendant resource executives are conserving their travel and marketing expenses these days. The September-October time frame is especially competitive. Big-money conferences are a tough sell. My one big exception is the New Orleans Investment Conference, which brings together thinkers, miners, legislators, academics and probably the most loyal and highest net-worth audience I ever have run across. I go almost every year in late October. Plus, the hotel venue is more than reasonable; it's downright cheap. The service is excellent. The so-called content -- the speeches, exhibits and semi-private luncheons and dinners -- are mostly superb, practiced and sharpened. The roast suckling piglet kicks it off the first evening.

See: Thom''s Latest at BabyBulls.com

Thom Calandra is a lifelong journalist and investor who writes for www.babybulls.com, Cambridge House Cafe, The Gold Report & other select providers of investment news. He is a principal of Torrey Hills Capital in Del Mar, California. Comments also can be seen on Twitter in the categories of @thomcalandra and @babybulls. He supports the Gold Antitrust Action Committee (www.gata.org)