Definition of deal: Any transfer that ultimately raises money for a company treasury or an individual.
Thus, there are deals to vend in properties. Deals to sell cheap shares. Deals to raise money. Deals to divide properties, combine properties, earn into concessions. Syndicate. Merge. Spin off. Roll back. Flow thru. Option out.
Elaborate and structured deals for cash-pool corporations. Deals that benefit management. Deals that benefit property holders. Deals that sometimes benefit shareholders. Private placements. Shell games. Converts. Warrants.
The theory is that the investor audience, the sophisticated segment, seizes “the deal” at the moment when it is cheapest. The trick is the transaction must leave room for decent-size gains … and the investment/prospector must be “real.”
That’s the hard part: sizing up what is real in terms of geology, in terms of managers, in terms of properties, in terms of the “paper.” The asset managers, seasoned investors, promoters and hardened natural resources investors spend their entire lives seeking the deal moment.
If you got into Ratel Gold (TSX: T.RTL, Stock Forum) in September, for instance, well you now had a stake in some African assets – the Obuasi in Ghana. But when Ratel announced an agreement and strategic alliance with CGA Mining (TSX: T.CGA, Stock Forum) in mid-October to buy the King King project, a large 20 million-ounce gold-equivalent copper-gold deposit in the Philippines, well, the shares more than doubled.
The cheap paper part? Well, in early September, investor and property owner Richard Hains added almost three million shares to his 15 percent or so stake in Ratel in exchange for his property interests in Central Asia Minerals. The deal involved an option. Mr. Ratel got his fresh Ratel shares at 27.5 Canadian cents. Ratel shares in October went as high as $1.34. The transaction by Mr. Hains was there for all to see on the Stockhouse news wire.
The gold/silver/copper prospectors are getting whacked this week, so the “zeal for deal” might be subdued. The silver lining is that seasoned timers, if their assumptions are correct and their communications lines in place, get very cheap paper instead of cheap paper.
One guy I just talked to, John Carter at Trueclaim Exploration (TSX: V.TRM, Stock Forum), dealt the public company interests he had in the Sudbury region of Ontario, Canada. The area is rich in nickel, copper, gold, lots of elements. Mr. Carter is now the president of Trueclaim, and he was pitching his company, but not necessarily a deal, on his way through California this week.
John Carter at age 58 has about 30 years in the mining business and related property areas. He owns more than five percent of tiny Trueclaim, thanks in part to the 1.5 million shares he received in exchange for his property interests. What I liked about his “story” is that in the past three months, he has bought another 1.6 million shares of Trueclaim in the open market.
Other deal components for a mining executive who is not necessarily seeking a deal (just yet) include: the Canada-traded shares are now listed on the so-called QX section of the pink sheets in the USA over-the-counter market. The QX is said to be the highest tier of the OTC market.
Aside from the Scadding Gold Project at St. Thomas in Ontario, Trueclaim also has an interest in an Arizona silver mine. “I think silver is still way, way below fair value,” Mr. Carter says.
More: Mr. Carter is on his way this week to sign a memorandum of understanding with First Nations representatives in Ontario. “We think they will take part in our next placement,” he says.
Trueclaim’s first financing was at six cents a share. The stock (70 million shares fully diluted) is now 17 cents Canadian. “Look, we can do a flow-thru (lending) financing for the Canada assets today if we wanted to at the equivalent of 23 cents a share. But I would prefer to do a straight placement at 30 cents (a share),” he says.
OK. In this down draft, getting to 30 cents from 17 cents would be a big deal. Mr. Carter says, “I think we just have to show investors the depth of our team, our commitment, our plans and our continued work on the properties. We believe in working in the shadow of the head frame.”
Both Mr. Carter and CEO Eric Plexman get $8,000 a month from Trueclaim. Mr. Carter says, “That works out to about $2.11 an hour.” The Trueclaim team appears to be a good deal for a junior prospector. You can look for yourself and judge on the company site.
By the way, I do not own the shares. That might or might not be a big deal.
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THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom was founding editor of MarketWatch, CBS MarketWatch and FT MarketWatch. He was the voice of Thom Calandra's StockWatch and The Calandra Report. Thom has been covering life-sciences and natural resources since 1988.
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