Today: True North Gems; EAM Nightmare; Tembo In Tanzania; Stratex International
Ruby Red slippers today for True North Gems, one day after the singer Pink donned a ruby-red dress for her Oscars' version of "Somewhere Over The Rainbow."
True North confirmed a 30-year mining license for its Greenland deposit, which also has stockpiled rubies and pink (or is it Pink?) sapphires. See news,
I have owned True North Gems (TSX:V.TGX, Stock Forum) for about three years, after I met CEO Nick Houghton. That was in Vancouver, Canada, where Mr. Houghton runs True North. He's a trained gemologist from northern England.
Nick's crew has been working the Greenland property for 10 years. This license comes after public hearings and a fresh fiscal pact with the government, which will receive taxes and a royalty on the sale of gems.
Still to be done are (more) engineering designs, more environmental monitoring designs and more negotiating with government and area groups.
I am in the money on my remaining TGX shares (yes, I threw in the red-ruby towelon some of them about a year ago) and will continue to hold them. The stock is up about 32 percent Monday in Canada to 16 cents.
This and Stellar-Diamonds of Sierra Leone (STEL on AIM) are my only stone investments. Take a look at this report -- for my former Ticker Trax audience atStockhouse. This was the first time I wrote about True North. See 2011 report.
True North by most accounts is a promising company that one day could be a prime seller of high-quality gems to posh outlets. (I have not been to the property.)
True North Gems has as a co-founder the enterprising and controversial Andy Smith, a geologist and executive in Vancouver.
You can in that 2011 report of mine ignore, please, most of what I recall at the time was a generally favorable opinion about Andrew Lee Smith. Mr. Smith at the time ranCanaco, a Tanzania gold prospector, or ran it into the ground, some former shareholders say. Now it appears he is doing the same with the cash and assets he controls -- called East Africa Metals (TSX:V.EAM, Stock Forum).
Andrew Lee Smith is trying to spend EAM cash to purchase a related company in the former Canaco fold and one he heads still as CEO: Tigray Resources (TSX:V.TIG, Stock Forum).
EAM a short while ago loaned Tigray $2 million of its cash from the corporate treasury to keep Tigray from going out of business. That loan is due in June 2014, and Tigray has something close to $3 million in liabilities.
I have received several calls from EAM shareholders wondering why the heck it appears Mr. Smith is trying to forgive Tigray that loan in his efforts to fold Tigray into EAM, which is developing a tired Tanzania gold deposit I once thought had value: Magambazi (Handeni).
One caller told me that in recent discussions with Mr. Smith, the EAM (and Tigray) CEO said he had no intention of "forgiving" the Tigray loan. When I asked Mr. Smith about that, he commented, "A revisionist account of the (telephone) call."
I visited all of these properties in Tanzania and Ethiopia years ago and met the SinoTech Chinese geologists and technicians working Tigray's Ethiopia gold holdings. SinoTech is based in China and is legitimate in terms of its geophysical and geochemical expertise.
(Sadly, I still own all this withered stock.)
Mr. Smith in August 2013 beat a British Columbia Securities Commission charge that he and other Canaco directors delayed to release of eight Tanzania drill holes until after the company had approved stock options for executives and directors. See ruling.
I am reminded that one lawsuit is filed against East Asia Metals for $16 million worth of finders' fees. Vancouver promoter Harp Sangha has the action against Mr. Smith and the former Canaco for failing to compensate him after a trip in search of China investors, according to the suit. See article.
"It is as it sounds -- baseless," Mr. Smith told me nine months ago, in May 2013 when the claim was filed in Canada. See: EAM response to lawsuit.
Mr. Sangha is the fellow who introduced me to another company, Rango Energy (OTCQB:RAGO, Stock Forum), which subsequently became a client of the investor outreach firm to which I consult: Torrey Hills Capital in San Diego, California.
Every time I turn around, there is activity circling around Mr. Smith that has less to do with geology and more to do with the stock market.
The former Canaco's shares crashed a couple of years ago, starting even before Mr. Smith's team delivered a lackluster compliant resource for Magambazi (Handeni), the Tanzania gold holding that turned out to have only 720,000 ounces of indicated gold in a 43-101 Canada report. See article.
That was in May 2012, well after I had visited the Tanzania property and liked it, with one or two small reservations. So did a Toronto securities analyst who was on board for the trip.
You have to remember, Canaco's stock reached into the $6 range at one point, probably in winter or spring of 2011. Canaccord Genuity especially was exultant about Canaco's possibilities. See article.
At various times, the company reported excellent gold grades from the Tanzania property, and made statements such as "significant new exploration developments" for Handeni. (September 2009)
Back then, many natural resources prospectors still were benefiting from rising gold, silver and copper prices. The three-year swoon that has slammed resources equities, at least until prices picked up a few weeks ago, began in my book in March 2011.
Mr. Smith needs 66 percent of Tigray shareholders to approve this transaction. The 56-year-old Mr. Smith uses his Iron Mask Explorations Ltd. as a geology consultancy.
Canaco, er, I mean, East Africa Metals, has about 25 cents a share of cash and sells right now for 12 cents a share. See terms of merger proposal,
Just so you know, I loved what I saw of Tigray's properties in Ethiopia, part of what they call the Arabian Nubian Shield and similar to what one sees in Eritrea gold deposits in that part of eastern Africa, and in Sudan, too.
As for EAM's Tanzania holdings, Brent Cook, the geologist who runs a newsletter service from southern California, was first to warn me away from Canaco's (and Mr. Smith's) work at Magambazi in that nation. Being a knuckle-head, I sidestepped what turned out to be a 100 percent-spot-on Brent Cook opinion that the team at Canaco back then would fail to deliver anywhere near even 1 million ounces of gold in a compliant resource.
If that happened, yow, the Canaco shares I paid as much as $3 for in the open market were screwed.
Mr. Cook noted at the time all-around euphoria as investment banks placed high price targets on equities of most any junior prospector that had drill rigs working a property in eastern Africa, western Africa, Mexico, Canada, Nevada, hey, anywhere.
"Analyst targets of between $4.50 and $8.00 as the company raised $163 million at $5.40 in the spring of 2011, based on high-grade drill intercepts that didn’t hang together too well," Mr. Cook said in one note.
I was screwed.
I am so far under water on both my Tigray and my East Asia Metals, not even a SCUBA suit will help me. Luckily, as part of the mess of Canaco's unravelling, shareholders received what looks like a fine piece of another Africa prospector: Orca Gold. Richard Clark, the former Red Back Mining (and now owned by Kinross) CEO, is chairman of Orca Gold (TSX:V.ORG, Stock Forum).
Orca's team is working something on the order of 15,000 square kilometers of property in northern Sudan, near the border with Egypt and also part of that Arabian Nubian Shield.
Galat Sufar South is a Sudan prospect that Orca put out a mineral resource estimate of 1.3 million ounces gold and 400,000 ounces inferred. About 90 percent of the compliant gold resource is no deeper than 100 meters of the surface.
I only can hope that ORG does not at some point become OMG. Right now, ORG shares are hanging together well.
Stratex International: This is one of those London-traded merchant banks that will surge if the gold and other resources continue to rally. It owns a nice piece of Tembo Gold (TSX:V.TEM, Stock Forum), which is near Lake Victoria in Tanzania and is working gold targets in the shadow of a nearby African Barrick producing mine. Stratex participates in placements. I am going to buy some Stratex.
See:https://www.marketwatch.com/investing/Stock/STI?countrycode=UK It is STI on London. I own shares of Tembo Gold.
I visited Tembo CEO and geologist David Scott, chief geologist Peter Haworth and their team at the property in Tanzania one year ago this month of March. David worked at that African Barrick Gold mine, Bulyanhulu, for many years. Stratex and other professional investors are interested in Dave and his team's discovery (ongoing) of steeply dipping gold-silver-copper reefs -- the same kind that brand Bulyanhulu with insanely high grades, when those reefs are not collapsing.
Everyone knows Dave Scott in the hood, and he and his family also contribute to the formation of schools and school curricula in Tanzania.
I hope I do not sound like a knuckle-head when I say that Tembo Gold's neighborhood is filled with working mines, both legal and wildcat. You might recall the photos I sent of the thousands of miners who converge on the area each time some company, including Tembo, publishes assays. (Please see blue-tents in photo attached; each tent is an illegal gold miner chasing the dream.)
Please see Part I & Part II of our year-ago TCR coverage of Tembo Gold in Tanzania, where I was positive enough to call the company's holdings there the next Oyu Tolgoi (Turquoise Hill and Rio Tinto in Mongolia). See: TCR @ Tembo. I still think this is possible.
CEO.ca: On the energy front, please see this interview with a Calgary investment banker who has been around the block, and he's just 41 years old.
See:https://ceo.ca/2014/03/02/petronova-pacific-rubiales-farm-in-worth-another-look-black-spruce-merchants-sonny-mottahed/
Welcome to a regular March into TCR. Since March 1, resources execs, aficionados, a television professional, securities analysts and even medical doctors have joined The Calandra Report family. They include an Australia uranium technology executive, an investment writer (Seeking Alpha, etc), a television cinematographer, an osteopath, a coal miner in Mongolia and a Phnom Penh tuk-tuk driver ... The annual Calandra family Oscars balloting and dinner (seven of us) this weekend produced a winner. TCR family member Bob Havlik called in his choices for all 24 awards categories from Toronto, where the IT services consultant lives. Bob nailed 21 of the 24 categories, leading us to begin a background check on his sources. Mr. Havlik also won the 2013 Oscars competition here at home in Tiburon, California, where he and wife, Beverly, were visiting and staying with us. Bob wins $12 -- that's U.S. paper.
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