No money, No bid.

Yesterday's trading in Duncan Park Holdings is a clear example of the direction that many juniors are headed on the Venture Exchange. No bid/Ask $0.005.

The CEO is throwing $56K in, just enough to pay legal, audit and listing fees but it is not looking good for the shareholders. Although today is a brighter day with a $0.005 bid.

I would not be surprised if the Venture Exchange takes one step closer to the OTC BB market in the U.S. and implements spreads of 1/10th of a cent for any stock trading below $0.05.

The Venture Exchange would probably implement this under some sort of temporary relief policy.

The TMX Group is a public company that pays dividends, the TMX Group can not afford continued drop in volumes or listed companies. I believe listing standards will have to be lowered to keep milking the listing fees from the 1000+ Junior Zombies.

A fancy name for an IR guy

Well I have seen it all now, the stupid fancy titles we give to jobs. From Stock Brokers called Vice Presidents of Investments, Walmart clerks called  Sales Associates and a Subway dude called a Sandwich Artist.


Now we have a new name for the IR guy : "Investor Awareness Professional for TSX and Small Cap Companies.

What next? Posties calling themselves "Information and Media Delivery Specialists"?

I am going to have to go back and re-edit my resume to reflect my past professionalism.

Or maybe my new profession? Investor Awareness/Avoidance Professional Blogger!

At one time a professional was someone that held certain credentials like a lawyer, architect, doctor etc...

Market uptick on Royce Resources ROY.H

I noticed a market uptick on Royce Resources today and picked up another 10,000 shares at $0.06/share.
Royce Resources is a Frank Giustra/ Gordon Keep shell looking for a deal. There is $1 million in the kitty and Frank Giustra's Radcliffe Foundation owns a large chunk of the paper.

I noticed back in January that 4 million options were set and a large cross had been done at $0.025/share.

 http://vancouverventure.blogspot.ca/2013/01/market-observations-on-royce-resources.html

Now it seems the bids are firming up and stock is being bought off the offer.

Is something up?

Broker slam down explained

Further surfing around the Oreninc.com site I came across the Broker Tear Sheets. This is a list of all financing's done for the last year by individual brokerage houses. So if you see Canaccord or Dundee slamming the bids on your favorite mining deal, just check out this link to see how much stock they own and at what price.

These are invaluable tools given the typical investors short memory span. Currently this information is free and I hope it stays this way.

The Broker Tear Sheet can be found here.

Oreninc, do you need to know if your stocks are on life support?

I was sent over this great web site that screens current financing's on the Venture Exchange. It separates wheat from the chaff pretty quick.  The list is chock full of guys trying to raise $100-$300K and some actual legitimate offerings.

As tough as it is I have cleansed out all the sub $0.05/share holdings I have. These include Stoneshield Capital, Teslin River Resources and Fortunate Sun Resources. Better to get something than nothing.

Check out Oreninc.com and click on the deal log.

Keeping the lights on

I am noticing a wave of basic financing's on the Venture Exchanged designed to buy another year of operations. I understand that management of these companies are trying to give themselves time in hope of a better market a year from now.

From my point of view this is mostly a wasted allocation of money as these funds are just to pay rent and salaries and will not generate any upside to the current shareholder.

BTW I did not know that the Exchange will now allow financing's to be done at $0.01/share. Yikes!

Here is a sample of a buying another year.

Pantheon Ventures Ltd. has closed its non-brokered private placement of four million common shares at a price of 3.5 cents per common share for gross proceeds of $140,000. The proceeds from the offering will be used for general working capital and to pay outstanding debts of the company.
The common shares are subject to statutory hold periods such that they cannot be traded or resold prior to June 23, 2013.
The price of the common shares is below the usual minimum pricing guidelines of the TSX Venture Exchange and falls within the pricing guidelines in effect as a result of the exchange's temporary relief provisions extended until April 30, 2013, by the exchange bulletin dated Dec. 12, 2012.

Lakewood Mining Co. Ltd. has agreed to a non-brokered private placement of up to $174,000 of its securities, consisting of the sale of up to 17.4 million common shares at a price of one cent per share. The private placement is subject to acceptance for filing by the TSX Venture Exchange.
The proceeds from the private placement will be used to pay or provide: fees to the company's auditors, transfer agent fees and other accounts payable, option payments and exploration expenditures to maintain its mineral interests in good standing, estimated corporate administration costs for six months, the costs of this proposed private placement, the costs of a possible shareholder meeting, and unallocated working capital.

I have no position in either of these companies.

Goldquest is back in my buying range

Goldquest Mining is back into my sub $0.48/share buying range on the back of news. The latest news is from the last three holes from their previous drill campaign, the market has sold off with on higher expectations.

Next anticipated results will be from their deeper anomalies that the Company is currently drilling.

Obviously the market got way ahead of itself on this original hole (LTP-94, which returned 235 metres grading 7.9 grams per tonne gold and 1.4 per cent copper) and Goldquest has had a hard time pulling equivalent grades since.

Goldquest Mining Corp. is releasing assay results from three additional holes in the Romero gold/copper discovery zone on the company's 100-per-cent-owned Las Tres Palmas trend in the Dominican Republic.
Drilling highlights include:

• LTP-123 contained 68 metres grading 1.76 grams per tonne gold and 0.29 per cent copper (2.23 grams per tonne gold equivalent) within a mineralized zone of 138 metres grading 1.00 gram per tonne gold and 0.20 per cent copper (1.33 grams per tonne gold equivalent).
• LTP-124 contained 48 metres grading 1.21 grams per tonne gold and 1.02 per cent copper (2.88 grams per tonne gold equivalent).

These are the last results from the phase of drilling targeting the shallow induced-polarization interpretation that discovered the Romero mineralization. Future drilling will be guided by new, continuing deep geophysical data. New data collected this year have identified two distinct east-west-trending target zones at Romero. Drilling to date has focused on the Romero North zone, where highlights include LTP-94, which returned 235 metres grading 7.9 grams per tonne gold and 1.4 per cent copper (10.2 grams per tonne gold equivalent). Romero South, a newly identified trend, is essentially untested and returned a stronger and shallower chargeability anomaly than Romero North.

Ding Ding Ding and the winner is Coeur D'Alene

Just as I suspected First Majestic opted not to top off Coeur D'Alene bid for Orko.

First Majestic Silver Corp. today notified the board of directors of Orko Silver Corp. that it is not matching the offer made by Coeur d'Alene Mines Corp. and will not be increasing the consideration under First Majestic's offer to acquire all of the issued and outstanding Orko shares.

I guess this leaves the door open for First Majestic to keep window shopping.

Santacruz Silver Mining SCZ.V raises $40 million

There is still life left in a few juniors and Santacruz Silver is one of the few deals still able to raise copious amounts of money.

On January 23 Santacruz announced a $30 million financing, 3 hours later it was raised to $35 million and as of today it got bumped to $40 million.

I would expect some drift in the share price as the need to support the stock over $1.85 to get the financing closed is no longer required.

Santacruz Silver Mining Ltd. has closing its prospectus offering announced on Jan. 23, 2013, through a syndicate of underwriters led by Canaccord Genuity Corp., and including Raymond James Ltd. and Cormark Securities Inc. The company issued 19 million common shares at a price of $1.85 per common share for gross proceeds of $35.15-million. The underwriters also exercised their overallotment option to acquire an additional 2.85 million common shares for additional gross proceeds of $5,272,500. Including the proceeds from the exercise of the overallotment option, the total gross proceeds of the offering were $40,422,500. The underwriters received a cash fee equal to 6 per cent of the gross proceeds of the offering, as well as 1,311,000 warrants, each of which is exercisable to purchase one common share for a price of $1.85 for a period of 24 months. Canaccord was issued an additional 60,000 common shares as a corporate finance fee.

Word has it that this deal will eventually go to $4.00/share, whenever I hear that a $3.00/share price is more likely.

Rambling thoughts on Santacruz Silver Mining SCZ.V

Given the Coeur D'Alene proposal to pay more for Orko Silver with a cash component I believe that First Majestic just might collect the $11.6 million break up fee and move along.

This brings to mind that Santacruz Silver Mining is a very near term producer and if First Majestic passes on upping their Orko offer then their attention might turn to Santacruz.

There are a few other Mexican based silver miners that also might have their eye on Santacruz including Fortuna.

Yes Orko has a large deposit but millions are needed to develop this property, why not take a run at Santacruz? Once the  Rosario Project is up and running further risk is minimized for any company considering going on a shopping trip.

For the record I am long both FR and SCZ

San Gold SGR.TO does tap the market

At least it was not Waterton

San Gold Corp. has entered into an agreement with a syndicate of underwriters co-led by Scotiabank and CIBC, under which they have agreed to act as underwriters to purchase, on a bought-deal basis, 50,000 convertible unsecured subordinated debentures of the company at a price of $1,000 per debenture, for total gross proceeds of $50-million.
The underwriters have been granted an option (the "Option") to purchase up to an additional 15% of the Offering, exercisable in whole or in part at any time up to 30 days following the closing of the Offering, which is scheduled to occur on or about March 6, 2013 (the "Closing Date").
The Debentures will mature on March 31, 2018 (the "Maturity Date"), unless earlier redeemed, and will bear interest, accruing, calculated and payable semi-annually in arrears on March 31 and September 30 of each year, at a rate of 8.00% per year. The Debentures will be convertible at the holder's option into common shares ("Common Shares") of the Company at any time prior to the close of business on the earlier of the Maturity Date and the business day immediately preceding the date fixed for redemption of the Debentures at a conversion price of C$0.50 per Common Share (the "Conversion Price"), subject to adjustment in certain circumstances.

Battle For Orko Silver OK.V

The paper battle is on between First Majestic FR.TO and Coeur D'Alene Mines for Orko Silver.

The prize, La Preciosa Project or 110 million ounces of silver.

The currency, what ever your stock is trading at today.

 

Orko Silver Corp. has received a binding proposal from Coeur D'Alene Mines Corp. for the acquisition by Coeur of all of the issued and outstanding common shares of Orko by way of a plan of arrangement. The Board of Directors of Orko (the "Orko Board") has unanimously determined, after receiving the advice of its financial and legal advisors, that the Coeur Proposal constitutes a "Superior Proposal" pursuant to the arrangement agreement between Orko and First Majestic Silver Corp. ("First Majestic") originally announced on December 16, 2012 (the "First Majestic Agreement") and has provided notice of such determination to First Majestic.
Under the terms of the Coeur Proposal, Orko shareholders may elect to receive in exchange for each Orko Share:
-- 0.0815 common shares of Coeur ("Coeur Shares") and C$0.70 cash and 0.01118 warrants to purchase Coeur Shares ("Coeur Warrants"); -- 0.1118 Coeur Shares and 0.01118 Coeur Warrants, subject to pro-ration as to the number of Coeur Shares if the total number of Coeur Shares elected by Orko shareholders exceeds approximately 11.6 million; or -- C$2.60 in cash and 0.01118 Coeur Warrants, subject to pro-ration as to the amount of cash if the total cash elected by Orko shareholders exceeds C$100 million.
If all Orko shareholders were to elect either the all cash (and Coeur Warrants) or the all share (and Coeur Warrants) alternative, each Orko shareholder would receive 0.0815 Coeur Shares and C$0.70 in cash, together with 0.01118 Coeur Warrants, for each Orko Share. Each whole Coeur Warrant will be exercisable for one Coeur Share for a period of four years at an exercise price of US$30.00, all subject to adjustment in accordance with the terms of the Coeur Warrants.

 Good for Gary Cope for extracting the best deal for the shareholders.

I do not own shares of Orko or Coeur D'Alene but have a position in First Majestic.

Retail investors death by a thousand slashes

Since the GFC in 2009 the markets have entered a new era, risk aversion. Today's investor not only wants a return on investment but more importantly want a return of investment.

That being said the luster of rising gold prices and monetary stimulus from 2010 to 2012 saw the resurgence of some risk capital return to the Venture Exchange. Many new juniors have gone public and flooded the markets with marginal management and marginal properties all in the hopes of cashing in on the retail investors risk appetite.

Risk capital is the arteries of the Venture Exchange and the retail investor is the life blood. This life blood has been drained away leaving the Venture Exchange at serious risk in 2013 and for many years to come.

It has been documented recently at Kaiser Research Online that 632 junior companies with less than $200,000 in working capital are at risk of being de-listed. These stats were as of June 2012 and Kaiser believes today, the stats are closer to 1000.

Harbingers were plentiful at the past Cambridge Show, from the sorrily missed booth babes to free giveaways and the lack of the ever so popular business card draws for swag.

Talk on the floor at the Cambridge show centered around other industry shows in Chicago, New Orleans and San Francisco that were complete flops. Booths at the Vancouver show were half price or in some cases free. Most attendee's on Monday seemed to be industry players.

Even more telling is the statistics that the TMX Group release, these stats clearly show a peak in 2011 with significant declines for 2012.

More foreboding financing stats listed below, total financing's were down 41% YOY from 2011 to 2012. The first month of 2013 witnessed an even larger drop in financing's with drop of 51.4% from a year earlier. There is an old market saying "As January goes so does the market for the year", 2013 is not going to be a good year in the junior space.

It has reached such a crescendo that other long time Venture Market traders have pulled the plug on this exchange, including myself with a few exceptions.

The current state of Venture Exchange will have a massive effect in Vancouver where brokers and industry players rely on fresh capital to sustain a lifestyle. Maybe after the cleansing occurs risk capital will return, not to sustain a lifestyle for the promoter but to create spectacular return for the risk taking investor.



Does the Venture Exchange really need 2567 listed companies? No. When 1000+ companies get purged from this exchange then maybe health will return to this market.

Until then millions of dollars of investor capital has been squandered, creating nothing but a tax loss for Joe Public.

Analyst Call on San Gold SGR.TO

It is ironic that Stonecap Securities has finally issued an underperform rating on San Gold now that it trades at $0.39/share. I assume the shares were rated outperform from the $1.70 range to the $0.50 range, leaving the investor 70% loss in value.

A new target price of $0.55/share and a current trading price of $0.39/share would give the investor a $0.16/share gain or a 40% return, outperforming the market would it not?

It looks like San Gold is going to have to tap the market for working capital lets hope they are not knocking on Waterton's door.

Fortunate Sun's Mexican Stand Off

Judging by this news release the management of Fortunate Sun have failed to gather enough support to minimize the property vendors and current shareholders. While it is true that Fortunate Sun may cease to exist over the next 12 months. The scenario below shows who is the winner and loser when companies consolidate.

Fortunate Sun Mining Company Ltd.'s special general meeting held on Feb. 8 has been adjourned until a date to be determined no later than March 8, 2013. The company will continue to accept late proxies that were not voted prior to or at the meeting. The company urges shareholders to vote in favour of the resolutions put forward by management. The company will issue a news release announcing when the meeting will reconvene.
Managing director, Scott Young, stated: "Given the current market conditions and lack of available funding for junior exploration companies, it is imperative to consolidate our shares to attract new projects, management and financing. Without this, Fortunate Sun (along with many other junior exploration companies) may cease to exist over the next 12 months."

So lets examine who wins and loses when a roll back occurs. All information on present issued and outstanding shares is gathered from Fortunate Sun's original prospectus. I have made market assumptions on the post financing  aspect as an example.

Prior to the IPO, Fortunate Sun issued to the insiders 5,299,500 shares for $312,300 giving themselves a cost base of $0.059/share. Roll that back 5-1 and it works out to a cost base of $0.295/share for 1,060,000 shares.

Now lets assume that present management is successful at consolidating Fortunate Sun, the shares will trade at approximately $0.05-$0.07/share post consolidation allowing the management to raise funds at $0.05/share. (Best case scenario as I believe companies can raise money at $0.03/share now.)

Assume that $300,000 is raised by the insiders post consolidation, they will issue 6,000,000 shares to themselves giving them a new share base of 7,060,000 for a total of $612,300 and a new cost base of approximately $0.087/share.

Meanwhile the property vendors who were issued 10,012,000 shares for a deemed value of $580,000 or approximately $0.058/share now find themselves owning 2,002,500 shares at a cost of $0.29/share.

Lets not forget that schmuck, Joe Retail, he is long 7,500,000 shares at $0.15/share and post consolidation they are left with 1,500,000 shares with new cost base of $0.75/share.

Management now has firm control with 7+ million shares while only having 3,500,000 shares in pesky minority hands.

So given the above examples you see how management wins, property vendors come in second and Joe Retail comes in at a distant third.

What I do not understand is the present shell structure of Fortunate Sun is pretty clean with 25 million shares outstanding and has a market value of $278,000, pretty cheap and easy to work with if someone wanted a shell. I would prefer a consolidation if it was announced with a management change or a new group but since it is not I feel like another sheep that has just been to the market to be sheared.

As a show of faith it would only take $18,000 of management's personal money to clean up the 636,000 shares to $0.05 and maybe another $20,000 to keep it there while they try to raise money. Judging by the lack of any insider buying as per Canadian Insider faith is presently non existent. It reminds me of an old  saying from the Vancouver Stock Exchange days, "never buy (support) your own deal".

I would assume the proxy fight is between the property vendors and management, as management appeals to Joe Retail to vote in their favour with a sprinkle of fear on top. Joe Retail has most likely thrown in the towel and can't be bothered to vote.

I know this Joe can't be bothered  to vote as I lose either way.

Range trading Goldquest Mining GQC.V

With all the $0.45/share private placement stock flushed out coupled with lower drill expectations Goldquest is starting to trade a $0.49-$0.58/share range. I managed to trade a narrower range than this last week and I am currently bidding at $0.50/share to repeat the process.

Market Capitulation on San Gold Corporation SGR.TO

San Gold is finally seeing some market capitulation on the back of disappointing forward looking statements.

I have been in and out of San Gold over the past months and have pretty much stayed clear since it traded back at the $0.75/share range.

Today I decided to re enter a trade at $0.46 after a market drubbing in the past 2 trading sessions.

The short strokes for the sell off is no real production growth guidance for 2013 and no reduction in cost either. I think San Gold has had a history of missing guidance and finally the market is throwing in the towel.

Judging by the trading activity it seems some fund managers are getting off large positions through Stonecap Securities. It always amazes me how often you see fund managers buy at the top and sell at the bottom. Since fund managers are performance driven they often chase markets, all for an expensive management fee to boot.

On January 1st this year San Gold traded at $0.80/share giving the Company a market cap of $268 million today San Gold has had 42% knocked off their capitalization. As of today San Gold trades at a scant market cap of $154 million, well within a hostile take over range.

One has to go back to a 5 year chart to see if San Gold has traded below $0.50/share so any purchase here in the $0.40 range has had all the risk taken out of it.

A familiar pattern is to expect 3 days of down trading before a bounce, I expect some follow through selling pressure in the first part of tomorrows trading day and that should exhaust most sellers.

Perhaps management has decided on a strategy of  under promising  and over delivering going forward. If they have it will take some time to regain their creditability.

I am looking for the dead cat bounce trade on San Gold and will look to see if an exit trade can be had back in the mid  to high $0.50's

San Gold 5 year chart.



 

Insiders loading up on Taipan Resources TPN.V

On the heels of setting 5.55 million options at $0.32.5/share it looks like the insiders are leveraging up another 1.7 million shares in the latest announcement.

Taipan Resources Inc. is proceeding with a non-brokered private placement to raise up to $3-million through the issuance of up to 8,571,428 units at a price of 35 cents per unit. Each unit will consist of one common share of the company and one transferable share purchase warrant, with each warrant entitling the holder to purchase an additional common share of the company for a period of five years at an exercise price of 50 cents. All securities issued pursuant to the private placement will be subject to a statutory hold period of four months and one day.

Management of Taipan intends to subscribe for 10 per cent or more of the offering.

I am surprised that Taipan is not shooting to raise $5 million.