Article re: AccumulationGold Canyon is Heating up – Institutional Buying is Evident March 6, 2015 Admin Gecko Research, Mar 6, 2015 As we dig deeper in our due diligence on Gold Canyon (gcu.v) and tell the story from our perspective, it’s evident to us that one or several institutional buyers have been (and still are) buying shares in the open market. In this article we will try to shed some light to that thesis and what they might find so attractive that the retail investors have missed. Institutional Buying We have been following the day-to-day trading of GCU very intensely for a while now and when we were buying shares around 16.5-17 cents, we noticed that someone was iceberging (see below) their order at 16.5 cents. This is a typical strategy for deep pocket institutional buyers and we think they weren’t very successful at that level. They probably picked up 400,000-500,000 shares before GCU started to move higher. We are simplifying a bit here, but close to 70% of the company’s outstanding shares has traded in the last three months and although some of those shares are traded several times, a large huge chunk of that was Sprott and Pinetree dumping (as we explained here) their holdings. We are making a guess here that someone has been accumulating between 20-40 million shares at the very least in Gold Canyon lately and what we can say with a 100% certainty, those shares have not been bought by retail investors. Someone is still out there buying and the only conclusion we can make from that is that institutional buying is strong in GCU at the moment. Life Cycle of a Junior Explorer Placing Gold Canyon in the graph below, it’s our opinion that Gold Canyon is past the “discovery cycle” and has already bottomed out in time for its next cycle. We have seen the speculators leave (Sprott, Pinetree and very likely many retail investors) and now it seems like institutional money is moving in. Our whole thesis for our investment is that GCU is ripe for a take-over, so we see someone else moving the Springpole Gold Project forward with the next step being to take the Springpole Gold Mine to a full feasibility study. JrLifeCycle Let’s assume that we are right and that one or several institutions (take your pick: funds, large-cap producers, Chinese interests) are trying to acquire a strategic position in GCU, what attracts them besides what’s already known? Sure, the 5.1 Million ounce open pittable deposit in a great jurisdiction is the obvious reason. But as we have touched on before, we suspect that the potential at Springpole is greatly understated and perhaps even misunderstood. We have had a friend of ours, a geologist who we consult when we ourselves lack in knowledge and understanding of the technical aspects, go through all the technical reports and other available information. If you look at the map of Springpole below, all the drilling that has been done is in a small corner of the property, to the north-west. It’s clear that most of the project has never been drilled and if what our geologist told us is correct, Springpole could very likely become a >10 Million ounce gold mine. The deposit is open at depth, to the south and to the southeast. springpole The Springpole Gold Mine put in perspective Springpole’s resources are 5.1 Million ounces eq. (4.4 Moz Indicated, 0.7 Moz Inferred). When one prepares a bankable feasibility study one has to do infill drilling to prove up the resources into reserves, so in that sense this comparison is not 100% accurate, but it will still get you an idea of just how undervalued Gold Canyon is. Two other large Canadian projects: 1) Goldcorp has one of their flagship properties in the Red Lake district, the Red Lake Mine, which produced 414,000 ounces in 2014. That mine has 2,550,000 ounces in Proven and Probable reserves. 2) Goldcorp recently acquired Probe Mines (valuing Probe at the time at C$526 Million) mainly for its Borden Gold Project. Borden has both higher grade underground resources as well as (perhaps?) open pittable resources, together totaling 4.35 Moz mostly in the Indicated category (similar to Gold Canyon’s resources). Even if Springpole doesn’t contain a single ounce more of what’s been discovered so far, the current resource alone makes this a world class mine in the making. The metallurgy is non-complicated, the strip ratio is very low and the project is in a country that is considered one of the best in the world. To be fair, Gold Canyon need to bring the Springpole Gold Mine further ahead in order for a comparison to Probe to feel accurate, but how much should 5.1 Million ounces be valued at in a take-over? C$100 Million? C$200 Million? And assuming we are right, how much should the potential to double the resource be worth on top of that? Gold Canyon’s market cap is a mere ~34 Mcad at today’s 18.5 cents/share (184m shares x 18.5c) and we don’t want to speculate where a fair bid would come in at, but it sure isn’t going to be near where the stock is trading today. A shareholder’s dream scenario would be if more than one party eventually gets seriously interested, only then would we get a maximized and fair bid for Gold Canyon. (Iceberging: When large participants, such as financial institutions, need to buy and sell large amounts. Instead of placing a single large order, it can be divided into smaller lots. Usually through automated order mechanisms, iceberg orders are used for the purpose of hiding the actual order size. By doing so, other participants only see a small portion of the total order at a time, the same way the “tip of the iceberg” is the only visible portion of an immense mass of ice) Team Gecko Research www.geckoresearch.com If you like our work, feel free to share this link with your friends for our free newsletter: www.geckoresearch.com/signup We are not investment advisors and what we write is our own view only. Please read our disclaimer.