Buying damaged goods Roca Mines ROK.V

Roca Mines has been on my watch list and I was waiting for the opportune time to buy.

Roca Mines operates the MAX Molybdenum Project which has seen a short setback in the Companies operations. Roca’s production was in an upswing when the Company had to halt their mining operations due to underground stope wall sloughing at the 830mL and 805mL. This has effectively shut down the mining operations in August.

Now this is bad for the existing shareholders but an opportunity for new shareholders to pick up some shares on the cheap.

I was waiting to purchase Roca once Scott Broughton had closed a $5 million financing at $0.25/share. The private placement was closed on November 24^th and the funds are for the rehabilitation of the Max Mine.

I picked up an opening position of 10000 shares at $0.29/share and will look to add to it if all goes according to plan or if there is further tax loss selling.

I believe once operations recommence I should see some considerable upside in the stock price.

Is Stoneshield Capital Corp STS.V ready for a pop?

Further to my post outlining my original reasons for investing in Stoneshield Capital STS.V I have added another 23,500 shares to my position today at $0.125/share. I currently own 70,000 shares of Stoneshield which represents my largest position across all my accounts. I am still bidding on another 9,000 shares at $0.12/share.

I also have 40,000 warrants that are exercisable at $0.18/share. For a total of 110,000 shares.

I understand that the management is close to announcing a property acquisition that could take Stoneshield to the next level. The increased trading volume today indicates that I am not the only one to hear the rumors.

Stay tuned.

Sold the balance of my Petrodorado PDQ.V

Today I sold the balance of my Petrodorado at $0.64/share for a 41% return in 9 months. My decision was based on the vulnerability of my profits during the recent pull back.

Canaccord has put a $0.75/share price target on Petrodorado and there are still plenty of warrants that are in the money. With the forced warrant conversion at $0.90/share Petrodorado may be range bound for a while.

  
The trading pattern also mirrors that of Alange Energy ALE.V. Alange and Petrodorado are very similar companies in structure and operations. 

I would be more comfortable owning Petrodorado if I new how many warrants are still out there to be exercised.

I have used the money from the sale of Petrodorado today to buy Roca Mines ROK.V today at $0.29/share.

Roca Mines has been on my watch list and will be the subject of my next post.

About face with Amato Exploration AMT.V

There is good reason why Amato is trading at the $0.11/share range and it all seems to be centered on the current but outgoing President Mel Reeves. Mel has managed to take the stock price from $0.60/share to $0.10/share. Not only that but the $1.1 million raised last November at $0.50/share is all but gone.

The 9 month financial statements ending for August 31, 2010 shows $951,000 spent on business, market development, general  and administrative expenses. I am all in favor of juniors putting that kind money into drilling programs, but nearly a million dollars to show up to the office everyday?

Rule #7 addresses this situation, management that  treats a public company as their entitlement to support a lifestyle that they have been accustomed too at the shareholders expense.

It seems my view resonates with the other directors of Amato as well. Yesterday they announced a deal to vend in a small oil and gas lease in New Mexico. Now the Gulf Jensen prospect is no company maker but it does indicate a change in Management. With the property comes Jim Romano.

As predicted on my November 11th post on Amato, the Company has announced a financing at $0.12/share. Not to line the pockets of the insiders but to effect a change of control to Jim Romano. If Amato completes 2 million shares of the private placement Jim Romano will be appointed CEO and President of Amato and current President Mel Reeves will resign.

From November 2008 to date Amato has raised $2.5 million and has little to show for it. The recently announced $0.12/share financing is needed to refresh the depleted treasury.

Is there a reason to stay in Amato? Well, the shell structure is still pretty favorable and there is some new blood being added but Jim Romano has an unproven track record. I think he may just be a temporary CEO until the board finally finds a deal that will take Amato to the next level.

In my view there is very limited upside on Amato going forward. Amato has been handicapped by the past actions of management that has created a dissatisfied shareholder base to date. My guess is that the original IPO shareholders will be selling north of the $0.30/share range along side the 4 million $0.12/share holders with their 4 million warrants at $0.18/share.

Barring a major property announcement my exit price will be $0.30/share if and when it gets there.

Passing on Pacific Bay Minerals PBM.V

I was offered to participate in Pacific Bay Minerals PBM.V latest financing at $0.08/share. My broker e-mailed me a quick corporate presentation on the Company. Generally I like my cheap penny stocks that trade below $0.10/share, but this one screamed PASS.

One look at the chart and Pacific Bay Minerals really is a $0.05/share stock pumped up a bit to close the recent financing. Once the financing is done my feeling is that I can probably acquire the shares again at the $0.05/share level, that is if I really want to own it.

As I scrolled down the pages of the presentation Pacific Bay is focused on uranium, I am not a uranium fan. I once had shares in Aldershot Resources ALZ.V and still own some 10 cent warrants  Aldershot was the last time I touched an uranium deal. Luckily I averaged down on Aldershot and managed to get out flat after tying up my money for 2 years.

I know the world needs uranium for nuclear plants but my investing money is best spent on precious metal or oil plays. Uranium just has to much baggage that goes along with it.

As with any stock play management is key to success and this deal is run by David Brett and Guilford Brett formally of Cusac Gold.


As a once shareholder of Cusac Gold that was eventually taken over by Hawthorne Gold HGC.V (subject of the previous post) I am not ready to lose another $5000-6000 on a Brett and company deal.

My philosophy is that you need to stick with winning management, guys that have made you money in the past.

Thanks for the opportunity on this one but my money will wait for a better deal to come along.

When to take your lumps Hawthorne Gold HGC.V

Sometimes you have a dog of a stock that might be in a Tax Free Savings Account or a RRSP account that you can not look at anymore. I was an owner of Hawthorne Gold in both of these accounts until yesterday. The selling of this stock hurt as there is no tax loss advantage in disposing of it, and on paper it added up to about $6000 in losses. From my point of view there is little hope left for this deal.

I became a shareholder of Hawthorne when the Company took over Cusac Gold back in 2008. I got one share of Hawthorne for every 19 shares of Cusac. I originally bought Cusac due to the Table Mountain Property and the Taurus Property. The Table Mountain was a past producer with infrastructure in place and the nearby Taurus property with an inferred gold resource of 1+/- million ounces of gold.

It had seemed that David Brett took Cusac as far as he could and needed a more experienced management to take Table Mountain to the next level.

Richard Barclay and Michael Beley, the founders of Eldorado Gold and Bema Gold should on paper have the experience of making Hawthorne a gold producer.

With that kind of experience I thought there was hope for my new position in Hawthorne.

In 2008 on the reassurance of the then investor relations representative Todd Hanas, an associate that I trusted and given the roll back of 19 to 1, I decided to average down once and doubled my position at $0.50/share.  I was touted that once the $0.45/share private placement was completed the price of the stock would move back up. Thanks buddy I owe you one!!

To date Hawthorne has yet to put Table Mountain into production and has since dropped their Fraser Gold property, which they spent millions on. Hawthorne tapped the market for millions of dollars and all that there is to show for it is a highly diluted company, a collapsed stock price and shattered reputations.

Since inception of Hawthorne Richard Barclay and Michael Beley has taken a $2.00/share stock and turned it into pennies. Sure they have a past track record of success at mining gold from the ground. This time around they have found success in mining money from investors wallets.

December 8^th 2010, Richard and Michael will have their last kick at the can with Hawthorne as they issue 91 million shares to China Mineral Holdings’ subsidiary Skyocean. This will effectively change the control of Hawthorne.

Congratulations Richard and Michael on the Chinese bailout investment.

 

With the objective of making the Hawthorne loss back, I re invested those funds into a company called Dualex Energy International DXE.V.

To date I have purchased 26,000 shares at $0.10/share. My objective position is of 50,000 to 60,000 shares. 

Why Dualex? That is the subject of my next Blog.

Christopher James Gold CJG.V is now Gunpoint Exploration GUN.V

It is official, Christopher James Gold is now Gunpoint Exploration.

VANCOUVER, BRITISH COLUMBIA, Nov. 16, 2010 (Marketwire) -- Gunpoint Exploration Ltd. (TSX VENTURE:GUN) announces that, effective November 16, 2010, the Company has changed its name from Christopher James Gold Corp. to Gunpoint Exploration Ltd. The Company further announces that it has implemented the stock consolidation of one post-consolidation common share for ten pre-consolidation common shares effective November 16, 2010. The name change and stock consolidation were previously announced in a news release dated November 10, 2010. Both are being carried out in connection with the Company's proposed acquisition (the "Acquisition") of the interests of Chesapeake Gold Corp. ("Chesapeake") (TSX VENTURE:CKG) in its Talapoosa gold-silver project located in Lyon County, Nevada and the La Cecilia and La Gitana gold-silver projects located in Mexico (the "Chesapeake Assets"). Chesapeake will also transfer $1,000,000 in cash and negotiable securities to Christopher James on closing of the Acquisition. In consideration for the Chesapeake Assets, the Company will issue to Chesapeake 31,977,899 post-consolidation common shares. 

The remaining shareholders were rolled back 10:1 leaving about 5.5 million shares out there in the public's hands. Liquidity could be adversely affected by the lack of shares available. Better days are ahead for the shareholders of Gunpoint Exploration.

Canaccord shares my target on Petrodorado PDQ.V

I found this posting over on Stockhouse.com it seems that Canaccord has a price target on Petrodorado that shares my take. Find it here.

My assumption is that if Petrodorado does trade through the $0.75/share barrier the next level will be $0.90/share where there is a forced conversion of the warrants. Rumor also has it that there is a news blackout right now, a ploy often used by oil and gas companies.

The quick and dirty is as follows:

Recent Highlights

• Visure-1X well (Buganviles Block, Upper Magdalena Basin) intersected 114 feet of hydrocarbon net pay across three zones. The well encountered oil-bearing sandstones in three formations, including the regionally productive Guadalupe Formation.
• Based on results, we have increased the number of recoverable reserves we include in our risked exploration upside estimate for the prospect (from 3 million to 5 million barrels).
• Petrodorado expects to spud the Tuqueque-1X well shortly.

Valuation
Our C.75 target price is based on our estimated cash position of C$55 million, the value of 215 million warrants (C$75 million) plus our estimate of the risked exploration upside from the company's properties.
Risks
Petrodorado is exposed to exploration risk as well as financing risk. Production growth from modest levels is completely dependent upon exploration success, while poor share price performance would result in US$75 million of warrants (C.35 exercise price) not being exercised.

When to ride it out, Christopher James Gold CJG.V

The last 2 posts I wrote about how to deal with a stock position that has gone down in price. One was to take the tax loss and the other was to average down. Sometimes you just have to ride it out for better days. This is what has happened to Christopher James Gold, and after 2 years better days are just ahead.

Christopher Gold was a high flyer back in 2007 with the prospects of the Ranch and Garcia properties. Max Baker the President was wise enough to cash up the treasury at that time, $6 million was raised at $0.85/share.

With the money raised the drill results did not turn out to be as promising as management had hoped. Subsequently Max decided that both properties did not warrant further expenditures. Christopher James was left with $3.5 million in the bank and a collapsed stock price.

I purchased 30,000 shares in my RRSP at $0.16/share on the fact that Christopher James has competent management and  lots of cash. Not only that, but the stock was once $0.80/share. I thought I was buying near the bottom. In addition the stock was in my RRSP therefore there is no tax loss advantage.

2008/2009 was a pretty tough time for junior exploration companies with the market meltdown. With cash in the bank Max Baker was approached with plenty of properties that needed funding, but none were worthy. 2008/2009 was also a tough time for the existing shareholders as the price of Christopher James sunk to a all time low of $0.02/share.

Fast forward to 2010 and Max Baker has pulled off a major coupe to revive the shareholders of Christopher James Gold. Max Baker and his long time associate Randy Reifel, President of Chesapeake Gold Corp. CKG.V opted to spin off 3 of Chesapeakes’ under valued exploration properties into Christopher James Gold.

Randy Reifel of Chesapeake felt that the value of the Talapoosa, La Gitana and La Cecilia properties were not being recognized in the market and that value for these projects could be recognized in a different trading vehicle, Christopher James Gold.

In simple terms, this transaction goes as follows. Current shareholders of Christopher James Gold get rolled back 10:1 to clean up the old share structure. Chesapeake will give Christopher James Gold $1,000,000 in cash and securities and three great properties. Christopher James will also issue 32 million post consolidated shares to Chesapeake, making Chesapeake a major shareholder to the tune of 84%. Upon closing of this transaction Christopher James Gold will raise $1,650,000 at $1.10 share.

The light at the end of the tunnel is November 30^th 2010 for Christopher James to re emerge as Gunpoint Exploration. Good things can happen to those who wait and the present shareholders of Christopher James should be well rewarded.

When to average down, Amato Exploration Ltd. AMT.V

Sometimes you have to take a tax loss on a stock like I did with El Nino Ventures. El Nino has pretty much run its course in its’ present structure. Sometimes it is worth averaging down on a stock when it is fairly new in its life cycle.

Amato is one of those that I bit the bullet on. I was originally offered Amato on the IPO at $0.30/share, at the time I gave it a pass. Once Amato was trading it quickly ran to the $0.70/share range and I kicked myself for not buying the IPO.

December 2009 rolled around and Amato was still trading at $0.65/share and the Company announced a $0.50/unit offering. Since I missed the IPO I decided to participate in the next round. The offering consisted of a $0.50 share offering with a half warrant at $0.75, I was already in the money so I signed up.

I had a few doubts at first as the CEO was Melvin Reeves and he has an unproven track record with mining companies. It was the fact that Yannis Tsitos was on board that convinced me that there could be some potential for Amato. Mr. Tsitos had spent 18 years with BHP Billiton Group. Mr. Tsitos is also the President of 2 other juniors First Bauxite Corp. FBX.V and Stronghold Metals Z.V

Well I should have listened to those doubts, soon after the closing of the $0.50/unit financing the stock price has been all downhill from there.

I recently added to my position here at $0.10/share. It has brought my average cost down to $0.26/share.

Why average down on this deal? Well first off the IPO was done at $0.30/share and the secondary financing was done at $0.50/share. With Amato trading at $0.10 share I am buying someone else tax loss. Amato is still early in its’ life cycle with no major distribution from the original shareholders. No shares where ever issued down here and with only 12 million shares issued the turn around in stock price could be sharp and swift. 

I must add that I purchase Amato in my Tax Free Savings Account so there is no benefit for taking a tax loss. 

My only fear is that management decides to do a financing down here at these prices. I have seen management of companies do it before. Typically they finance it with other peoples money at higher prices then let the stock come down in price. Once it is at a super low price they announce a financing with a full warrant and load up on the shares themselves. My speculation is that current management will attempt this.

If in the coming weeks the price of Amato drops into the $0.08/share range I will probably pick some more up. I will be looking to exit this position somewhere north of my average cost once it gets there. I can pretty much write off the $0.75/share warrants as Amato will probably not see that price range before they expire.

Once I am out of Amato I will pass on any future Melvin Reeves deals, but as I write this it has opened my eyes to Mr. Tsitos Stronghold Metals, which I think deserves a closer look. I threw Stronghold Metals on my watch list for future consideration.

Re loaded on Ratel Gold RTL.T

As per Monday's post I was pretty confidant of re purchasing Ratel Gold at $1.10/share. I got my fill this morning. Where I will exit I have yet to decide. There seemed to be quite a bit of support at the $1.10/ share range. Ratel failed to trade through the $1.06/share level today. It looks like that the $1.10/share might be the support level in the near term.

When to take a tax loss, El Nino Ventures ELN.V

I made quite a bit of money on El Nino back in 2007 when it ran up to $1.20/ share on the promotion of copper/gold properties in the Democratic Republic of Congo (DRC). The DRC was a hot place to be with the likes of First Quantum Minerals leading the way for large discoveries. El Nino was one of those juniors trying to ride the coat tails of a major.

I was left with a few thousand shares that I bought at $0.71/share. Today the Company has fully run its’ life cycle and trades at $0.06/share and is fully diluted to the tune of 90 million shares. 

It turns out for El Nino and for that matter First Quantum that the DRC is not the best country to invest in. Sure there is massive copper and gold properties there, but it is run by a very corrupt government that can change the rules as they see fit.

Today I sold my shares at $0.06/share for a tax loss of approximately $2000 and I am relieved not to look at El Nino any more. I need the tax loss this year as I have to offset quite a few gains that are not in my Tax Free Savings Account.

El Nino today has optioned out its Bathurst Zinc property that is a 50/50 venture with Xtrata Zinc. El Nino is also in a litigation suite over the property in the DRC. Law suites are messy for junior resource companies, they suck up all the capital and managements energy.

With 90 million shares outstanding, the optioning out most of its’ interest in the Bathurst Zinc property and the ongoing litigation of the DRC properties, El Nino is a candidate for a restructuring of the share capital. El Nino has run it full life cycle and the chances of me seeing $0.71/share again are pretty much nil.

Up next when to average down Amato Exploration Ltd. AMT.V

Exited Ratel Gold today at $1.30

The shares I bought on Thursday last week I decided to sell today at $1.30/share. Ratel has traded up against the all time high of $1.34/share and failed to push to new highs. It was a close 10% return for a few days of owning the stock.

I did leave an open order in to repurchase the stock at $1.10/ share as I believe the stock might make a pull back in the near future. I believe Ratel is going higher but I also believe will establish a short term trading pattern.

I took the money off the table and I can and will buy the stock back again.

Back into Ratel Gold RTL.T

I was hoping Ratel would trade lower than $0.90/share when it pulled back from making new highs. Unfortunaly for me it never did dip below $0.90. I reloaded today at $1.15/share after cashing up my account from the sale of Petrodorado. The chart indicates that there is strong demand for stock between $0.90 and $1.10 a share and I won't be able to buy again down at those prices.

The market seems to like this deal and is rewarding the shareholders with a nice win.

Petrodorado "sell on news"

News did arrive this morning on Petrodorado and also for Loon Energy. It looks like there is a discovery of oil on the Loon's Buganviles Block.

I still have the order in at $0.75/share as it is open and the order that I had at $0.80/share I moved it down to $0.64/ share. Not quite the 74% return I was hoping for but a 48% return non the less. I sold off a third of my position in one account. I believe that Petrodorado will go higher but it has to push through the "sell on news" event that is taking place today.

For you interest there are a few other companies that have taken the same path as Petrodorado in the fact that they got a big stake in exploration blocks from major oil companies. My watch list includes
Alange Energy ALE.V @ $0.75/share, Canacol Energy CNE.V@1.81 share, Petroamerica PTA.V@ $0.53 share. Alange and Canacol have made significant moves up recently.

Selling into Petrodorado's run

Petrodorado has been on a elevator ride this week straight up with significant volume. I have yet to see a news release or an event to push it to these levels. I believe there is a promotional push on the stock but there are also plenty of warrants that are well into the money.

With my 3 day rule I plan on selling one position at $0.75/share for a 83% return and part of another position at $0.80/share for a 74% return. I will hold the balance of my position for any further upside potential.

Speculating on Hilltown Resources HLT:CNSX

I have started with a position of 10000 shares at $0.13/share of a little known company called Hilltown Resources. I am currently on the $0.11/share bid for another 20000 shares.

Why speculate on Hilltown Resources? First off I like inexpensive stocks that fly under the radar and Hilltown is one of those deals.

Although it trades on the Canadian National Stock Exchange (CNSX) this did not deter me from taking a position. The CNSX is a less active exchange that is a little harder to buy and sell on, but if you have a full service broker they can execute a trade easily for you. Be aware that liquidity is somewhat lower than on a more senior exchange.

The advantage for the CNSX is that it is easy for shell companies to list and eventually graduate to the TSX Venture Exchange once a project is found.

Hilltown started trading back in February this year after an offering at $0.10/share and has been looking for the project to take it to the next level.

In June Hilltown hired Peter Eriksson to assist the directors of the Company to develop new business opportunities in Brazil. Peter has introduced the management to a private Brazilian group that has been small scale producers of iron ore since 1945. The management of Hilltown has been actively reviewing the opportunities that this private group has presented.

Hilltown is an early cycle exploration company with a shareholder structure that has yet to see its first distribution cycle. The management has completed a recent IPO and subsequent private placement to put plenty of cash in the coffers. I believe once a worthy project is acquired in Brazil, Hilltown will move the Venture Exchange and liquidity will increase.

From what I understand Management is closer to making an acquisition today then they were back in the summer. Hilltown is the type of speculative investment that is a buy and wait position, not an active trading type.  At today’s share price there is limited downside risk and plenty of upside potential.

Cashing up before tax loss season, December.

Recently I have been adding to the war chest and resisting the urge to jump in and buy in this market. I have always had great success in buying stocks in the 2nd. and 3rd. week of December. There are two reasons for this, one is tax loss season where investors clear out their worst performing stocks for a capital loss. The capital loss can offset the capital gains with the tax man.

Secondly buyers take time off over Christmas but the sellers never take time off. The lack of buyers creates some pretty good opportunities in deals that I like and have on my watch list.

I am on the bid of a Company called Hilltown Resources and have taken a small position in this deal. I will profile the Company tomorrow. I believe this deal will not be subject to the tax loss cycle that occurs in December.