Drilling down on Timberline: ThomWatch

Mr. Arensberg, writer of the GOT GOLD Report on Stockhouse, is a friend and confidant for many, many years. Gene’s research more than a year ago shone a light on minerals monger Rob McEwen and his U.S. Gold Corp (AMEX: UXG), which is searching for silver and gold in Nevada and Mexico.

In March 2008, Arensberg was following Goldcorp founder McEwen’s accumulation of shares in Rubicon Minerals (AMEX: RBY), which has rights to a large swath of the Red Lake gold mining district of Ontario in Canada. McEwen (in filings: Robert Ross McEwen) owns about a quarter of Rubicon’s shares, filings show.

Arensberg’s persistence paid off. Mr. McEwen, one of the mineral world’s natural resources (and, as they say on the radio these days), a “really nice guy, too,” in a two-week span of January this year scooped up for himself and an asset company he operates about 550,000 shares more of his U.S. Gold Corp’s shares … some of it at 96 cents and 94 cents.

Duhnh! Three months later, U.S. Gold sells for $2 a share in the U.S. market. The boost comes in part as silver’s price undergoes dramatic trading this month (April). Gene has since sold most of his shares – because as he told me today (Thursday), those Mexico gun and drug runners are making him a tad nervous.

(I beg to differ. Our Ticker Trax wealth service for qualified investors has built a large part of its Planetary Prospect Portfolio on silver and one Mexico mining company in particular. I shall be traveling south in about one week to see a silver property.)

At any rate, my friend Gene, who hops between Atlanta and Sugar Land, Texas, now is cruising the timberline. He is tracking a tattered fund manager’s sales and purchases of a drilling company called Timberline Resources (AMEX: TLR).

For our Ticker Trax™ subscribers, who receive this Instant Value (IV) information first, Timberline appears worthy of what Gene Arensberg craftily calls “a stink bid.”

Gene’s focus is a tiny asset manager (probably less than $25 million under management) called Praetorian. “It had accumulated a very large amount of Timberline last year and the year before,” Gene Arensberg, who like me is in his young 50s, tells me. “When the crash came they had big redemptions. Praetorian was then a big seller of TLR, which collapsed the price so much they couldn't sell anymore and then folded the old Praetorian and opened a new one.”

Praetorian’s status as guardian of the elite, in other words, expired. Even the Roman Empire had its decline.

This kind of mess happened to countless hedge funds and other speculators in the second six months of 2008. “When the old Praetorian folded, it distributed shares to some investors in-kind rather than liquidate the shares at almost no bid. That was what created the large overhang in the first three months of this year.”

Overhangs in Gene-speak are shares that almost surely will be sold at fire sale by worthy but needy holders. This leads to stinky share prices and what G.A. calls “stink bids.”

Thus: Praetorian, based in Florida, USA, moved what was left, its remaining position of 3.3 million TLR shares, into a “new” Praetorian. “They basically did a reset of the fund.”

Sounds sl … sli … well, slippery to me. But Gene says this happens all the time. Well, these capital crushing days anyway. Maybe we can call the first quarter of 2009, then, the Reconstruction of the Praetorian Guard.

“The managers decided to close Old Praetorian (B.C.) and reset with New Praetorian (A.D.), but still had some redemptions to do,” Gene Arensberg says. “It did the redemptions by distributing shares to the investors that wanted out. That overhang filtered into the market.”

Gene says the selling appears “mostly over.” The fund according to stock market filings is buying the driller’s shares again.

Gene told his small guardians of the cheap and stinky that he would this week move his stink bid for Timberline shares up to 23 cents or so. The shares sell for about 27 cents each right now.

“I managed to accumulate a little over 150,000 shares when it got hammered down to as low as 20 cents,” he tells me. “If it's anything like the past, Praetorian doesn't just buy once. It buys in multiple trades over a span of days or weeks. “

Timberline and its subsidiaries drill holes for mining companies. These are the kinds of folks we see at mines around the world, and especially in North America (Western USA) and Mexico: stinky but sweet, burly but beautiful. Thank you for smoking.

The company a week ago said it likely would see “positive net cash flow and a forecast to roughly break even on revenues of $3.7 million” for its drilling units.

The company of Timberline also said it extended a contract with Newmont Mining (NYSE: NEM) through February 2011. I reproduce here a shot of a Form 4, which tracks purchases and sales of securities by large holders of an individual company’s stock in the U.S. markets.

That is all for now. Thanks Gene.

Ticker Trax™

Please see tickertrax.com. Our fifth Planetary Prospect, a Mexico silver miner, is out of the bag for subscribers. Our latest complete issue of Ticker Trax – No. 8 – is fresh off the press.

Folks, photos from the Bahamas Investment Conference we attended are now available. The one just above is David Skarica and me at (overrated resort but still quite pleasant) The Atlantis on Nassau. We came across what might be another potent Mexico silver prospect at the investment show, which excelled on most counts.

· Bonus: Please nip into our Ticker Trax™ discussion group – only on Stockhouse.

· For an index of ThomWatch, please click here.

· For subscription service Ticker Trax, please visit: www.tickertrax.com.

· ThomWatch is published direct to Ticker Trax subscribers. The public will receive ThomWatch on Stockhouse within one to three days of its original publishing date.

THOM CALANDRA in 27 years of road work has helped his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch andMarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold. Thom visits bioscience companies, metals mines and energy companies in a search for reliable sources.

HOLDINGS: Thom’s holdings are listed for all Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He and his family also own recently minted gold and silver coins.

Ticker Trax™ is published by Stockgroup Media Inc. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse/Stockgroup Media that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader’s reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Trax does not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax. PLEASE DO NOT EMAIL THOM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2009 all rights reserved.

Stockhouse Conflict and Disclosure Policy:

Stockhouse publishing Ltd., owners and operators of Stockhouse.com, has established the following rules to ensure that there is no appearance of impropriety on the part of any Stockhouse Editorial writers ("Writers"). The content of Stockhouse Editorial articles (the "Articles") are the opinion of the Writer and any reliance on the content of these articles is at your sole risk. Our Writers are not registered investment advisors. You should not make any kind of investment decision in relation to Articles or stocks discussed in them without obtaining advice from a registered investment advisor.

Facts relied upon by our Writers are generally provided by the subject companies or gathered by our Writers from other public and/or private sources. These facts may be in error and if so, the opinions of our Writers may be materially different.

Writers may own, buy, or sell shares in public companies mentioned in their Articles, but in the Article they must prominently state their ownership position. Thus, a conflict may exist. Writers are not permitted to write Articles that attempt to benefit persons connected to the Writer, such as family or friends, except where disclosure is made in the same way as if the Writer him/herself owns stock.

Writers cannot solicit, accept, or agree to receive anything of value given or paid with the intent of influencing their Articles.

Stockhouse notifies each Writer about these rules, and we rely on the integrity of our Writers to ensure that our rules are followed.