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October 22, 2013
Most everyone likes an under-fished story. Even regulators.
So, this is Day 9.
Barkerville Gold Mines' return to trading brings a doubling of the stock price for those who bought the tarnished stock in America's pink-sheet market (symbol BGMZF) whilst the Canada shares were halted.
Those who bought Barkerville when the stock went back on line in Canada 9 days ago are up more than 30 cents a share.
Alas, those who bought 14 months ago on the Peter George surge are down about 75 cents, at worst.
"Don't worry," says Frank Callaghan from up there in Cariboo, near Wells, British Columbia. "Gold don't tarnish."
Barkerville shares' rise since Oct. 9 benefits the company's coffers, which Toronto investor Eric Sprott replenished with a $15 million loan.
We know the background: an open-pit resource that Mr. George estimated at north of 10 million ounces for BGM's Cow Mountain in British Columbia; the stock (BGM in Canada) surge in summer 2012; the stock halt immediately afterwards; more than a year of haggling with the B.C. Securities Commission and TSX Venture Exchange.
CEO Frank Callaghan, animated as ever in a call to me, is at the site right now along the Cariboo trend, four or five hours' drive above Vancouver. I hope to see the projects strung along the trend later this month or early next. It is something like 60 kilometers of mineralized trend with a history as colorful as Mr. Callaghan's wardrobe: 100 creeks with placer gold; seven producing or past producing gold mines. Gold pours are the payback here, although there is no truth to the talk that two-ounce replicas of Grouse Creek Chinook salmon are forthcoming.
I saw Mr. Callaghan several times during the stock halt. He was not hiding -- turning up for a birthday celebration for friend and fellow gold CEO Glenn Mullan in Vancouver; doing a pub crawl (and drinking lemonade instead of ale); exhibiting at resource shows in Toronto. Toking along with friends; er, I mean, taking photos with friends
How could Mr. Callaghan hide with those burgundy, phosphorescent orange and blazing vermillion ties, shirts and hankies? He is the classy oversized showman we all expect when we invest in a British Columbia gold mine.
Once, at a Cambridge House show in Vancouver, he was surrounded by shareholders asking when the stock would start trading again. His answer was, "Soon as we hear from Holland."
One fellow walked away, muttering something like, "What do the Dutch have fupp-the-duck to do with this?" (Photo: Frank In Top Hat)
Frank, first initial J. as in Joint, was referring magnanimously to his nemesis, Robert Holland, a BCSC geologist and regulator in Vancouver who must have blanched when he read the original Peter George resource report and its hints at 50 million ounces up there, 70 million ... nay, 90 million ounces of gold.
Now that the smoke is settling, I mean the Caroboo dust, here is the TCR skinny.
The terms sheet of Mr. Sprott's loan is a template for financing success, in our TCR view, if 1. the price of gold stays above $1,200 -- the lowest amount the Sprottian lender can receive for 12,500 or so ounces of gold during a span of 30 months; and 2. the stock price rises to 90 cents or so, almost where it is now -- making for what we read as an accelerated warrant payment to Barkerville, bonus or otherwise. It's a little complicated, like some French filmmaker's pot. Plot. See terms.
On the bonus factor, for instance, read: After reinstatement for trading of the Company, and in the event that the volume weighted average trading price of the Company's common shares on the TSX-V for a period of 10 consecutive trading days is at a 50% premium to the Exercise Price (the "Exercise Trigger"), the Company may require the Lender to exercise $5,000,000 worth of the Bonus Warrants (the "Forced Exercise") within 10 calendar days of the date the Company provides written notice (the "Exercise Notice") to the Lender.
The exercise price is this: a 20 percent premium to the volume weighted average trading price of the Company's common shares on the TSX-V for the five-trading-day period commencing five trading days after the Company's common shares are reinstated for trading (the "Exercise Price").
Our TCR stab at this is that the exercise price is going to be somewhere in the range of 85 cents to 90 cents a share; I did not take advanced statistics like the kids did here at home, so that is a guess. Today Tuesday is day 4 of the 5-day trading period after the first five days of trading began Oct. 9.
Whew.
All of this is a work in progress. So another 50 percent premium to that gives us a premium rush of about $1.25? Help me here, please. Don't scream if our calculations seem fishy.
Whatever the exact trigger-fish prices become, it is in Barkerville's interest to see shares go well above $1, when one factors in the volume-weighted effect. A forced exercise of $5 million of bonus warrants then goes to Mr. Sprott's desk for check-writing signature.
I have yet to purchase the shares. Have never owned them, But I probably will. I never ever want to see Frank Callaghan, or anyone like him with even a tenth of his integrity, go up in a puff of smoke in this business. I know I will get flamed for this: but I like him, I respect his 30-plus years of work in the business, and I enjoy both his company and his company.
BAYOU: Or by me. Either way. I likely will go to the New Orleans Investment Conference in November a day or three early. To go fishing in the Bayou for redfish and trout with a few friends.
Brien Lundin's yearly show has many of the speakers who go every year, including Canada's Eric Coffin, who for my money really gets into the exploring side of metals companies with no strings attached.
I'll be moderating a panel on the Sunday and leading a tour of exhibiting companies on the Monday. One of them, I believe, will be Chuck Provini's Natcore Technology (NXT in Canada). That is the solar cell technology developer, and retina builder, whose shares have doubled since I wrote about the company and bought in this summer 2013. Solar is, well, a pretty cool thing these days -- in the stock market. Look at SolarCity (SCTY); the shares have about doubled in October in the span of a few days thanks to production gains on new subscribers and a key purchase.
This year, Brien has a free newsletter that summarizes about 10 of the presenting miners and prospectors. It includes a few companies I own, including Cayden Resources (CYD), Dan McCoy's Mexico prospector in the Guerrero Gold Belt.
Newsletter: http://jeffersoncompanies.com/marketing/GO/turbo-charging-gold.php?SC=TC102113
This was the show where I first met several of the folks who have helped me understand how difficult it is turning gold, and platinum, into money. I enjoy it every time. But it is not always tidy. One or two of my euphoric moments about a large holding self-pulverized; this included Avanti Mining, the British Columbia molybdenum mine developer, some of whose shares I sadly still own. If I ever, ever agai get involved with an early-stage or mid-stage mine builder that uses debt-for-equity arrangements, drown me. In the Bayou.
I KNOW if you use this link, you get a decent discount to the admission price for the four-day show. That is the Bayou. By me. See: https://jeffersoncompanies.com/landing/speakers?IDPromotion=61301161008000147&IDPromotionsListCode=61310210911008128
Speaking of fish: Back from my trip to La Paz. The Baja Peninsula of Mexico is raging with construction. New restaurants. Fresh mahi and amberjack. Asesinos de payaso. A good, bullet-in-the-head-time was had by all.
In the Sea of Cortez wake of that trip, and my side journey to meet with Paramount Gold geologists in Chihuahua, I am happy to see shares of PZG (Canada and USA) reflecting the notion that Coeur Mining (CDE) almost surely will make a run at this company because of San Miguel. I own the stock and am purchasing more PZG.
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