Bob Moriarty’s Stock Tales from the Crypthttps://thedailygold.com/bob-moriartys-stock-tales-from-the-crypt/
BM: Canaco Resources Inc. (CAN:TSX.V) has a big property in northern Tanzania. I visited about six years ago and looked at some of the gold through a loupe. From that look, I could tell the gold had been formed right there. But the other geologists on the tour begged to differ and the company drilled another project to the south. That was a total bust and the stock fell through the floor. As a last-gasp effort, Canaco sold half of the company to the Chinese at $0.05 a share in early 2009.
The company returned to northern Tanzania, where it drilled and promoted the project like crazy. The stock ran from $0.06/share in 2008 to $6.40/share in 2011. The company got to a market cap of $700–800 million (M). Then, with the market expecting a resource of 5 million ounces (Moz) or so, Canaco announced just 1 Moz. The market killed the stock.
TGR: On May 15, 2012, it was trading at $0.87/share and two days later it was down to $0.36/share.
BM: This is a perfect example of a stock being smacked by the market because management over-promoted the project and it blew up in its face. The company now has $0.54/share in cash and is selling for $0.41/share. That is crazy.
TGR: You believe Canaco is an interesting investment, then?
BM: Anytime you can buy $1 bills for $0.80, it is a good deal. Canaco has 1 Moz of mineable gold. Its mistake was over-promotion. I hope management had a “come to Jesus meeting” and is figuring out how to use that $100M to turn the project into a mine. If you cannot make a mine with 1 Moz in Tanzania, you cannot do it anywhere