NSX Silver NSY.V a whole new concept on how to run a junior mining company

NSX Silver caught my eye the other day when I was scanning the news releases posted on Stockwatch, so I opted to dig a little deeper. On NSX Silver's splash page there is a note from the Chairman that quoted this "A Company run by Shareholders for Shareholders".  This concept got me to dig a little deeper and I had to click on the "find out more".

Here is the Welcome form the Chairman:

Dear Investors and future Investors
Welcome to our Company. First, I would like to emphasize that NSX Silver is exactly as it says in the sentence above: Run by Shareholders for Shareholders.
Allow me to explain: as you can read in our public filings, Van Hoof Industrial Holdings Ltd. owns a substantial amount of shares of NSX Silver (over  11 million at the latest count).
Prior to its listing NSX Silver was a fully owned subsidiary of NSGold Corp (TSX-V: NSX). To optimize shareholder value, it was spun off to the its shareholders on a 1:1 basis in March 2012.
As a professional (and often activist) investor, I want to set the right example: my annual salary from NSX Silver amounts to one dollar. Furthermore, I pledge that I will not take any share options in the Company. These options are better used to attract top-quality mining-industry professionals.
This means that the Company, like its parent before,  is COMPLETELY focused on delivering Shareholder Value.
In my view, optimizing the share price of NSX Silver involves a high standard of ethics, whether dealing with counterparties for acquisitions, the environment or the communities on the properties we want to develop. I hope you recognize the benefits of this philosophy and that your investment view fits ours.
As you will see on this website, we try to be as transparent as possible. The Library will provide you with reports and historic publications about our properties. If you have any comments or information to add, please let us know.
Kind regards,
Hans van Hoof
Chairman

The kicker in this welcome statement is that the Chairman is taking an annual salary of just $1.00. Sure he has 11 million shares and I am fine with that.

The thing with junior companies is most Chairman's and CEO's have an unspoken motto that is more aligned to "A Company run by the CEO for the CEO". My bet is 90% of the CEO's of listed juniors pay themselves in excess of $100,000/year through management fees and expenses all off the backs of the shareholders.

Tip of the hat to Hans van Hoof to think of the shareholders value first and his interest second. What a concept!

The sizzle, the steak and Saint Augustine Gold and Copper SAU.TO

There is an old promotional saying in the junior mining game that goes like this " you sell the sizzle and not the steak". This saying falls in line with the investor psychology of buying mystery and selling reality. A perfect example of both of these anecdotes is Saint Augustine Gold and Copper SAU.TO.

To put this into perspective I am using this 2 year chart to illustrate the sizzle and the steak cycle of Saint Augustine. By the way Saint Augustine is going to be my whipping boy today but this can be applied to every junior mining stock.

As illustrated speculators rush into a deal bidding the stock price higher with the mystery of SAU's new acquisition the King King property pushing the stock to $2.00/share. A perfect example is Michael Smedleys top pick back in January 2011 Ratel Gold now Saint Augustine, when asked why Ratel Gold? Michaels answer is "he has a soft spot for something new."

http://watch.bnn.ca/market-call-tonight-top-picks/market-call-tonight-top-picks-january-2011/#clip398463



Once the mystery starts to wear off and the Company goes through a news drought the sizzle starts to fade and we are left with the meat of the goods, or the steak. The sizzle is the anticipation and the steak is the tough chewy part you have to gnaw through and digest.

The current state of Saint Augustine is the chewing and digesting and eventually going for the nap on the couch. Presently Saint Augustine is in the oh so boring parts, Environmental Impact Study / Environmental Compliance Certificate getting / submitting declaration of mine project feasibility application. Very bureaucratic stuff that takes the edge off the stock price and eats up the treasury.

If all goes well maybe by the end of the year Saint Augustine will get an Approved Declaration of Mine Project Feasibility.

Maybe by 2015 Saint Augustine will construct a mine and maybe some sizzle will bring life back to the share price, although I suspect major dilution by 2015. After commissioning a mine it is all about ounces poured and cash flow that will make any movement in the share price of Saint Augustine.

That being said, Saint Augustine is dead money for the next year and the only time to maybe look at making a purchase is if there is a major capitulation of a shareholder pushing the share price to ridicules lows. Is there a chance that a major will take over Saint Augustine? There is a chance but only after Saint Augustine has derisked the play and moves closer to production.

For the record I am long 10,100 shares of SAU with a embarrassingly high price of $0.91/share. OUCH!

Ad sense removed from this blog

I opted to turn off the Google's ad sense from this blog to keep the look cleaner. If you ever think that a web site can make money from advertising, think again. This blog had 8898 ad impressions with a paltry 25 ads clicked on. The click through rate was a mere 0.25% netting me a whopping $26.00. No need to cheapen the look of this blog with the tacky advertisers that ad sense streams across my blog.

Silvermex SLX.TO pops on bonanza drill hole

Silvermex SLX.TO shares popped on drilling a small intercept of large proportions, 18,225 grams per ton over 1.45 meters. In all my years of reading news releases I have yet to see such a high intercept. Now obviously this is part of a veining system and Silvermex is extremely lucky to have their 2.5 inch drill pipe intersect this vein.

SILVERMEX INTERSECTS HIGH GRADE GOLD AT LA GUITARRA-306.99 G/T AU AND 1,033.60 G/T AG OR 18,225 G/T SILVER EQUIVALENT OVER 1.45 METERS
Silvermex Resources Inc. has released further underground drill results from five drill holes at its producing La Guitarra property located in the Temascaltepec mining district in the state of Mexico.
These latest drill results demonstrate the presence of a significant new ore extension on the main La Guitarra vein and have returned assays with bonanza grades of gold and silver, while the Doncellas vein in the hangingwall of the La Guitarra vein continues to return significant mineralization. Drilling has demonstrated the potential extension of the ore shoot 150 metres in depth and 100 metres in strike with the ore shoot still open to the northwest and at depth.
The diamond drill holes all intersected high-grade gold and silver, with the most prominent being drill hole LGS-57 where it intersected 147.473 grams per tonne gold and 607.703 grams per tonne silver over 3.2 metres. This includes a 1.45-metre interval of 306.99 grams per tonne gold and 1,033.60 grams per tonne silver. This translates to a silver-equivalent grade of 18,225.040 grams per tonne.
Other notable intersections include drill hole LGS-56 where it intersected 5.35 metres of 18.059 grams per tonne gold and 67.694 grams per tonne silver. This includes a 1.25-metre interval of 55.422 grams per tonne gold and 158.036 grams per tonne silver. This translates to a silver-equivalent grade of 3,261.683 grams per tonne.

A pattern is emerging that when Silvermex trades in the $0.35- $0.40 range it is worth picking up.

Insider trades on Paget Minerals PGS.V

Interesting insider trading on Paget has been posted on Canadian Insider with Pinetree Capital blowing out 350,000 shares around $0.18. It looks like Pinetree managed to sell into any rally that was a result of Roulston or Smedley's recommendations. On the positive side David Volkert did buy 200,000 shares around $0.155 at the end of February. I have my shares offered at $0.25/share.

Fortuna Silver FVI.TO Good use of a stop loss order

It is a discipline I rarely use but in the case of Fortuna Silver I am glad I used a stop loss order. My purchase was made at $6.05/share and I had a mental stop in if Fortuna traded below $5.80, I sold my shares out at $5.82 stopping myself out with a $196 loss. If I held on till today and sold at $4.70 my loss would have been $810.00. It is hard to take a loss but a small loss is easier to take than a large one.

CIBC downgraded Fortuna citing rising production costs and missing on the year end results.

Fortunately I do not subscribe to news letter publications but I am sure International Speculator and Lundin just lost their client base a ton of money with a refreshed  buy on Fortuna in the past couple of weeks around the $6.10 mark, do these guys ever recommend a sell when profits are on the table? I am not a subscriber to either of these publications but are these guys paid a fee to recommend these stocks or do they take a position opposite their recommendations?

Fortuna is in full damage control and it is best to stand aside to see where the trading chips fall. When Fortuna does finally find a base it will be a hard climb back to get their credibility restored.

Update: IKN Blog has a further write up on Fortuna Silver with greater details about the operations. For me, my interest in Fortuna was from a trading point of view only. The CIBC report can be found here in the top corner of the page.

Hudson Resources goes on sale

I have a bid in on Hudson Resources at $0.26/share for the morning. Hudson Resources has just got the stuffing knocked out of the share price by a fund that got involved in last years $17 million financing at $0.95/share.

Hudson Resources has a rare earth project in Greenland and I have been an on again off again shareholder and have written the Company up on this blog.

I have had the opportunity to chat with President James Tuer many times and he is a straight shooter that puts the money raised into the ground with Hudson.

Some broad strokes on Hudson at this price range includes raising $17 million last April of which the Company still has $12 million in the treasury ($0.15/share in cash). The net present value listed in the last PEA had their property valued at $616 million., Capex figure is $343 million. All though rare earths are the sizzle of the day they are still needed.

The double edge sword of getting a fund involved in your deal is when they decide to sell, they sell with no regard to the share price. An interesting fact that Larry Berman brought to light during his last visit to Vancouver is that fund managers do not hold onto a stock for more than 18 months. They actively manage the stock portfolio chasing returns and selling without emotion as it is not their money. This is the biggest difference with mutual/hedge funds and ETF's.

I am sure James got a call from TSX market surveillance today to explain the market activity if there was a material change in the Company it would have been halted.

I've got a bid in for the morning to see if I can catch a bounce on Hudson.

Update: I stepped up this morning and purchased Hudson at $0.33/share as the downside pressure seems to have abated and the bids have been building. Apparently it was a fund that participated in the $0.95/share financing that decided to take the tax loss, they had between two and three million shares.

Uh-Oh! Paget Minerals PGS.V becomes Michael Smedley top pick

Well Paget Minerals now has two cheerleaders in the market place with Brian Roulston making the call that Paget could eventually go higher and it would be difficult to acquire a position under $0.20/share. Today Michael Smedley touted Paget on BNN as his top pick. Michael's track record is not the greatest as the last time he was on he touted Athabasca Oil Sands ATH.TO down 33.5%, Millrock Resources MRO.V down 65.85% and Alderon Resources ADV.TO down 16.93%. Don't forget that he touted Ratel Gold now Saint Augustine Gold back at $1.89/share back in January 2011, but hey so did I.

http://watch.bnn.ca/market-call-tonight-top-picks/market-call-tonight-top-picks-january-2011/#clip398463

Now he is onto Paget Minerals and at least he is touting the stock near the lows but I wonder "Is this guy the kiss of death?"

 http://watch.bnn.ca/#clip641401

I guess this is why Paget traded 767,000 shares today.

Stopped out of Fortuna FVI.TO at $5.82

I need to make more use of stop orders and I decided today to stop out my recent purchase of Fortuna at $6.05 today at $5.82. Commodities are off today on news that China is no longer the great export economy that it once was. Off silver and gold go and with it the price of these producers. It looks like the next support level will be around $5.20 on Fortuna and I will see if I can bottom fish it there.

What an odd day, with silver off 2.31% and gold down $13.40 on the day, there seems to be a rally in silver and gold stocks. Fortuna FVI.TO ends the day up $0.05/share First Majestic FR.TO is up $0.20/share and Kinross K.TO managed to gain $0.32/share. As a student of the markets I am left perplexed on the day.

Update March 28 2012: The $5.20 level broke through all the way $4.27 a new 52 week low. At this point I am staying clear of Fortuna until a clearer picture evolves.

Spring cleaning.

There are a few deals I would like to get rid of this spring and free up the money for better deals. I really think the sell in May and go away is going to hit the junior explorers this summer.

First off I have a open sell on Teslin River Resources TLR.V at $0.10 and $0.12/share, the company announced a $0.10/share financing a while back and nothing has come of it so far. There might be enough of a story and buzz in regards to the Fraser Gold property that I can sell out my position.

Stoneshield Capital STS.V I have an open sell order in at $0.175/share. This deal is starting to get pretty diluted below $0.18/share and the time to sell is with any promotion/buzz around the Goldtooth drilling.

GMV Minerals GMV.V I have an open order at $0.28/share and at $0.29/share. I am betting on some speculative buying up to the $0.30/share range and I want to be there on the sell side with any news on drilling results.

Paget Minerals PGS.V is another one I have a sell in at $0.25/share. There will no doubt be some speculative buying in regards to their Ball Creek property. But lets be honest it is way up north and probably under a ton snow. The drilling season is pretty short up there, so get out with any rally. If Paget does manage to pull off some decent results there will be plenty of opportunity to reload in the future.

I have 15,000 Tolima Gold at $0.55/share in an open order waiting on news of their 10,000 metre drill program. It seems that a skeleton in the closet is more than happy to unload a large position in the $0.40/share range.

I have a ton of Saint Augustine SAU.TO but I am saving another posting for this deal.

Follow up to Royce Resources ROY-H. V being a qualified investment

 This memo is slowly going through the brokerage houses and if you deal with a small house then you probably have been informed, usually it takes longer to comb the accounts at the large brokerages to see who this applies too. Tier 3 companies do not qualify in registered accounts. I guess with 30,000 public sector jobs on the line some bureaucrat in Ottawa saved their job with this memo.

BACKGROUND
Corporations trading on Tier 3 of CDNX were, prior to being listed on Tier 3, quoted on the
Canadian Dealing Network ("CDN"). CDN was not a prescribed stock exchange for
purposes of the Act. As a result, CDN-quoted corporations generally attracted unique income tax treatment that affected both the corporations and their investors. In addition, the
eligibility of the securities of former CDN-quoted corporations for registered retirement savings
plans ("RRSP") and other deferred income plans was more limited than for the securities of
corporations listed on a prescribed stock exchange (such as The Toronto Stock Exchange, the
Alberta Stock Exchange or The Vancouver Stock Exchange prior to the November 26,
1999 merger, and now CDNX Tiers 1 and 2). The potential for this unique tax treatment for
former CDN-quoted corporations has been preserved for those now trading on Tier 3 of
CDNX. Further details on certain of the income tax considerations are provided below.

ELIGIBILITY FOR RRSPs AND OTHER DEFERRED INCOME PLANS
Investors should bear in mind that securities of a Tier 3-listed corporation may not constitute a
"qualified investment" for certain purposes of the Act. In the absence of the particular
corporation and the particular investor meeting a number of requirements set out in the Act, the
securities of a corporation listed on Tier 3 will not constitute a qualified
investment for RRSPs, registered retirement income funds and other types of deferred income
plans.

From this eligibility perspective, investors in securities of Tier 3-listed corporations are in the
same situation as investors in the corporations which were previously traded on CDN.

In summary, the eligibility for RRSPs and other deferred income plans of securities of Tier 3-
listed corporations depends on the circumstances of the particular corporation and the
particular investor. Accordingly, it is essential that investors speak to their financial or tax
advisors to determine the RRSP eligibility of any security trading on Tier 3 of
CDNX.

Update: I would not worry about it being in registered account until your brokerage house makes it an issue.

Fortuna Silver FVI.TO Buy at $6.05

I stepped into Fortuna Silver this morning at $6.05/share, Fortuna seems to trade a repeatable pattern similar to CGA Gold. Fortuna does tend to trade on the winds of silver bullion prices. I will look for an exit somewhere in the $6.80/share range. Short term support seems to be around $5.80 and resistance at the $7.00 mark but the overall trend is rising. Fortuna did trade down to $5.95 this morning but there were not a lot of shares traded hands at this price.

Stoneshield Capital STS.V road to dilution

Stoneshield Capital is going down a familiar road that many Venture Exchange companies tend to follow. The super highway to dilution with little value added for the shareholder. From July 2010 to July 2011 Management of Stoneshield has raised $1,920,000 and issued 13,700,000 share in doing so. Taking the float of the Company from 10 million shares to approximately 24 million shares (45 million fully diluted).

Yesterday Stoneshield has decided to issue another 15 million shares at $0.10/share undermining the previous two shareholders equity raises in the market. Generally this is viewed in very unfavorable terms as it burns the previous investors and one has to ask what did management do with all the money raised in the past 18 months also does management have the execution prowess to increase shareholder value with monies raised?
  

 Stoneshield Capital Corp. intends to complete a non-brokered private placement to raise up to $1.5-million through the sale of up to 15 million units at 10 cents per unit. Each unit will consist of one common share and one-half of one share purchase warrant. Each full warrant will entitle the holder to purchase one additional common share for 24 months from the closing of the private placement at a price of 15 cents per share for the first 12 months and 20 cents for the remaining 12 months

So Stoneshields best kick of the can with this latest raise will be the Goldtooth property, they better make it count. Once this money is spent Stoneshield will have diluted the shareholder base to the tune of 40 million shares all below $0.15/share and will have a lot harder time going to the well. BTW Stoneshield will be fully diluted to 67 million shares.

I have 40,000 shares that I purchased in the last private placement at $0.175/share needless to say I am not happy with Managements execution to date. My open sell order is in at $0.175 share if there is any upside to the Goldtooth property then I have some warrants but I fully expect my warrants to expire in 2013 out of the money.

Canaccord soaking up more Royce Resources. ROY-H.V

As a bullish sign, Canaccord has been soaking up more Royce Resource. The last time I saw Canaccord on the buy side an early warning report came out from Frank Giustra's Radcliffe Foundations insider purchases.

One thing of note is I recently had to transfer out my shares of Royce from my TFSA to my cash account as apparently Royce does not qualify as an acceptable security in the eyes of either CRA or the BC Securities Commission. Some of this volume may be attributed to this ruling.

The market has pretty much indicated that there is still no deal yet for Royce, tell tale signs will include buying from many different brokerages, large volume right from the opening bell and stock being bought off the offer.

Americas Petrogas BOE.V sell off

Americas Petrogas has experienced a sell off to the $3.33/share range today on no news. I stepped in and bought a 1000 shares at $3.43/share to see if there is going to a bounce. Generally the TSX makes the Company issue some sort of news in regards to any significant price movement up or down.

Considering that BOE just closed a $60M financing, I would assume that all hidden surprises would have been disclosed as part of the underwriters due diligence.

The only back ground chatter I have seen in regards to a sell off is either faults in the Neuquen Basin that has made fracking of the wells more difficult and/or that the Argentinian Government is fighting with oil companies and threatening to nationalize the oil and gas assets (mostly YPF).

A further update I sold 900 shares at $3.74/share today giving me 100 shares left over that has a $68 dollar cost base. In this case I opted for shares instead of taking it all in cash.

 

Out of CGA Mining this morning at $2.22/share

CGA mining was looking like it was running out of upside steam this morning and it did not help that the price of gold was of $16.00 an ounce. My after commission return was 6.9% on my investment. I have figured that TD Greenline charged me $54.00 on each side of the trade. I have opted to open an account with Credential Direct where this trade would have cost me $9.95 each side. The difference in trading commission with Credential Direct would have netted me a 9.34% return on this trade.

CGA Mining back on the upswing

Recent double bottom on CGA managed to push the price back down to $1.92/share this week and it seem that the stock price is back on the upswing. I have chosen $2.40 share as my exit on CGA and if it sells I will look to see if the pattern repeats itself.

CGA is still making lower highs but time will tell if the stock starts making higher lows.

Fortuna Silver FVI.TO on the aquisition path

Interesting article that popped up on Yahoo news is Fortuna Silver saying that they are on the acquisition path to grow their silver production. Fortuna is looking for Companies in either Mexico or Peru.

Fortuna Silver Mines is on the prowl for takeover targets as the silver producer looks to nearly quadruple its production over the next five years.
The Vancouver-based miner, which has spent the last few years focusing on starting up its San Jose mine in Mexico, is now turning its attention to growth, chief executive Jorge Ganoza told Reuters on the sidelines of PDAC conference.
The Peruvian-born executive was in Toronto to present at the annual mining gathering put on by the Prospectors and Developers Association of Canada.
"We have a strategic objective of producing 14 million ounces of silver (annually) within five years," said Ganoza, adding that the company plans to produce 3.7 million ounces this year. "We want to become a force in world silver production."
With about half of that new output coming from expansions at its existing projects in Mexico and Peru, Fortuna is taking a hard look at other growth opportunities.
"It will likely come from an acquisition," said Ganoza. "Now will it be a post-discovery, pre-development stage opportunity? Very likely, that's where we look."
To that point, Fortuna is eyeing targets throughout Latin America. Peru and Mexico are its preferred regions, but Argentina, Chile and Central America are also on its radar.
The main criteria is a silver deposit with a big enough resource to operate for many years and is similar to mines the company already has in its portfolio.
"Every time we think about bringing something new into the portfolio, we don't just look at the quality of the asset, we say 'how does this impact the portfolio'," said Ganoza.
"Not all ounces are created equal, we want ounces that provide that healthy margin that our operation needs."
With an ambitious growth plan and a tight timeline to make it happen, Fortuna is also banking on its existing portfolio of projects to help squeeze out those extra ounces.
The company plans to spend some $71 million this year, as its expands output at San Jose, revamps facilities at the Caylloma mine in Peru and continues exploration drilling on its Mario deposit, also in Peru.
A resource estimate for Mario is due in the second quarter. While quick to point out that it is still early days, Ganoza said that drill results at the new project are promising.
"We're excited about what we're seeing," he said.

A few junior production companies that come to mind that are still relatively cheap would be Silver Crest Resources SVL.V, Silvermex Resources SLX.TO. and Great Panther GPR.TO. Chesapeake Resources CKG.V has a massive gold and silver prospect in the Metates property but I think Gold Corp is already a large shareholder of Chesapeake and I would assume that Chesapeake is being groomed with Gold Corp in mind.

Focus Ventures FCV.V is managed by the same group as Fortuna Silver but Focus Ventures is still an early stage explorer in Peru, so maybe down the road Focus could be rolled into Fortuna.

If any readers know of another silver company that might fit the bill please do share.

Reloaded on CGA Mining CGA.TO at $2.02 today

I opted to pull my bid out from GMV Mining as the liquidity is not there. I have been eying CGA Mining for the past few days and was curious if CGA would break the $2.00/share support level. I even had a bid in at $2.01 a few days ago but did not get filled. Today CGA is back down to $2.01/share and I decided to buy 1800 shares at $2.02 as the selling is reluctant at $2.01 and the volume is light at this price.

The upside of CGA looks to be around $2.50 share and that is where I will put my exit order in.

GMV Minerals resumes drilling

GMV Minerals announced the resumption of drilling in Guyana. I have put a bid in at $0.16/share for 20000 shares as this could trade back to the mid $0.20/share on any hype created around the drilling program.

I already have a position at $0.20/share so I will stink bid GMV only and not reach for the stock.

GMV Minerals Inc. has commenced drilling on new targets defined by the recent geophysical survey (see press release dated Feb. 7, 2012). The first planned drill hole is currently at 245 metres, and has intercepted an acidic intrusive similar to other intrusive rocks associated with gold mineralization at other important deposits in Guyana, such as Omai (3.8 million ounces of gold production through 2006). The intrusive is in sharp contact with a sedimentary horizon that is considered to be a good host for gold mineralization. The first core samples have been received at the Acme Labs processing facility in Georgetown. A second drill pad and access road have been completed. Assays from samples just submitted from the current drill hole are expected to be reported more expeditiously than last year, and the results will be announced once they have been received and reviewed by management.
Drilling is planned to examine both north and south extensions of the late 2011 drill grid on targets that were outlined by the recent geophysical survey. The first hole is centred on a resistivity high/low contact centred over a 200-metre-wide chargeability high southwest of the original grid. This hole was planned but never completed last year, and the recent survey reinforces the importance of a drill test at this location. The second planned hole is northeast of the grid, centred on a chargeability high, and will extend at depth into a high/low-resistivity contact. The contrast in the chargeability response may indicate a significant rock type change with more intense silicification, associated with gold mineralization in the Guiana Shield of northeastern South America.