Business Insider
TGR: Can you give us a couple of examples of companies that have succeeded with that incubation strategy?
MB:Tinka Resources Ltd. (TK:TSX.V; TLD:FSE; TKRFF:OTCPK) is the best example. Its Colquipucro property in Peru is a great asset. I have been recommending Tinka to Gold Report readers since 2009.
In 2010, we raised a little over $1M and asked management to get the permits in place to develop the silver resource. Just before the meltdown in mid-2011, after the shares had hit a high of $0.75, there was a correction. We were set to do a $0.50/share financing to raise $5M. We scaled that back to $0.35/share to raise $2.25M. This minimized the dilution during a difficult period in the market.
In December 2012, Tinka moved its Zone 1 silver resource from 20.3 million ounces (Moz) to 32.7 Moz, under budget and in a very acceptable timeframe. The share price responded; the market went to $0.75?$0.80/share. The $2.25M raised was within the budget. If the company moves forward over the next 6?12 months to a level representative of fair value relative to its proven resource, it can do a much bigger financing at fair value. This gives the early shareholders a significant lift and, most important, a reason to hold the shares.
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