|
In the most recent paid promotions touting shares of Lone Star Gold Inc. (OTC:BB: LSTG, Stock Forum) there is no longer any talk of the U.S. Bulletin Board stock being a potential takeover target of Canadian gold mining giant Goldcorp. Inc. (TSX: T.G, Stock Forum) and (NYSE: GG, Stock Forum).
Goldcorp spokesman David Deisley put an end to that speculation in late August when he told the Vancouver Sun newspaper that such rumours are “inconsistent with anything that we have said to the market.’’
Referring to a Stock Castle report which claimed that Goldcorp “could gobble it up for $179 or more per share,” Deisley told a Sun reporter that the company planned to file a complaint with the U.S. Securities & Exchange Commission.
On August 29, Lone Star tossed more cold water on the Goldcorp speculation by disclosing that there are no formal or informal discussions involving the company or its management in relation to a potential acquisition of the company by any third parties.
“Any statement to the contrary has not been made with the consent or approval of the company,’’ it said.
Still, even though the takeover speculation has been put to rest, the paid advertising campaign rolls on.
Recognizing that there are many ways to skin a cat, the tout sheets are taking a more subtle approach, one that seems to be working, judging by the fact that the stock was trading at $1.09 on Thursday, after sinking to around 80 cents in August.
Hototc.com, for example, points out that Lone Star has mining interests in Mexico; a country that it said is already host to several Goldcorp operations, including the Penasquito mine.
The Hototc.com advertisement goes on to note that Lone Star has a 70% working interest in eight mining concessions in the La Candelaria region, which is located about 125 miles southwest of Chihuahua State in north central Mexico where Coeur d’Alene Mines Corp.’s (TSX: T.CDM, Stock Forum) and (NYSE: CDE, Stock Forum) Palmarejo silver-gold mine is located.
That’s all well and good. It doesn’t take a degree in rocket science to know that Mexico is a major area for gold and silver exploration and mining.
But can a junior with only $12,091 in cash (as of June 30, 2011) really be worth $126 million (market cap), based on the 115 million shares outstanding?
As Lone Star has reported recently, it has yet to determine whether or not there are any commercially viable gold and silver deposits on its La Candelaria concessions, raising the real possibility that there might not be any. If true, it leaves Lone Star shareholders in a very risky position.
This is a marked contradiction to comments made by Penny Psycho in PennyStockAlerts.co on August 14. In that report, Penny Psycho boasts about Lone Star’s “awesome potential,” and said the total value of the junior’s La Candelaria property is projected to be over $26 billion (based on current metal prices).
Still, as Stockhouse has already noted in an August 16th Short Report, one of the chief beneficiaries of this advertising campaign is Dan Ferris, a 29-year-old public relations official, who is running New Mexico-based Lone Star from a base in the United Kingdom.
According to company disclosure documents, Ferris plays multiple roles at Lone Star, including President, secretary, treasurer and sole director.
He and the junior’s biggest shareholder John Rhoden together own 52% of the company’s outstanding shares, according to regulatory filings. (Rhoden has 39% and Ferris has 13%.
Hototc.com says Ferris has a successful track record, having taking a startup company from $16,000 an annual turnover of $3.2 million in year three. But the tout sheet ignores that fact that the company in question – PR and events management organization Magnum Communications Ltd. – was put in liquidation two years ago after losing clients and failing to attract new business.
In the fine print in the footnotes of its report, Hototc.com said it was paid $45,000 by a third party for a one week Lone Star advertising campaign. The tout sheet also said the third party may own shares in Lone Star and any move to liquidate these shares could have a negative impact on the share value.
|