You're all hurting, right? It's a sea of red out there.
It's like this every year around Christmas time, when traders across the world are thinking about how they need to get little Johnny the GI Joe with the kung-fu grip, but it's especially bad when the fed is in 'tapering weirdness' mode and the resources sector has all the appeal of a Bin Laden costume at a Halloween charity event.
But there is still value to be had out there, apparently.
This is the image on the Stockhouse front page under Danny Deadlock's column slot right now.
And this is the story a few inches above it.
Oh, you lucky bastard.
Danny Deadlock features PMI Gold as an undervalued potential takeover target in his most recent Stockhouse column (Ticker Trax subscribers got the news weeks ago), and just a few days later, it happens, with the stock price jumping 44.6% on the day as Asanko makes a takeover play.
Here's what Deadlock said:
“PMI Gold Corp. (TSX: T.PMV, Stock Forum) is in West Africa (like Volta) but with much higher gold grades and a giant bank account. Their gold valuation is down to approx. $5.70 per ounce. A close regional neighbor to PMI is Asanko Gold Inc. (TSX: T.AKG, Stock Forum) ($2.15) with an equally depressed valuation but they recently raised $150 million for mine development. This complements the $190 million they have in their bank account.”
Deadlock continued, “At 28 cents, the market values this company at $115 million. If we pull out the net cash of $94 million it means the underlying gold ounces are being valued at $21 million (115 – 94). If we give them full credit for 3.1 million ounces but only 40% of the 1.4 million inferred (because it takes more money to prove up those ounces), we can say their “risked” reserves are 3.7 million ounces. If we now take the $21 million noted above and divide by the 3.7 million risked ounces, we can see the stock market value on those gold ounces is $5.70 per ounce. Very low given the grade, size of the deposit, and the strong balance sheet.”
Deadlock concluded: “The stock has good liquidity near 28 cents and this should improve during the next two weeks of tax loss selling. If you are willing to speculate on gold stocks right now (and go against herd mentality), then this is an attractive range.”
No freaking doubt. And thus, Asanko Gold decided to take PMI off the market, much to the joy of shareholders.
And Ticker Trax subscribers got this info before anyone else, locking in positions that have now more than paid for their annual subscriptions, even if that were the only Deadlock special they got in the deal.
Only, it wasn't. Because just a few weeks prior, Deadlock was at it again.
This time it was Volta Resources.
Volta Resources Inc. (TSX: T.VTR, Stock Forum) in Africa has 6 million ounces near 1.0 g/t with approx. $10 million in the bank. The gold is valued near $4/oz
When Deadlock spotted it, Volta was around $0.17 per share. Once he named it, it climbed to $0.23. Weeks later, B2Gold was in, gobbling them up for a deal worth $0.42 per share.
147% profit? Don't mind if I do.
Not enough free money? Then there was LX Ventures (TSX:V.LXV, Stock Forum).
In late October, as LXV was hovering around the $0.17 mark, Deadlock began to talk about a company that was wrenching him out of his traditional resources ground and, in his mind, would be the next big thing on the tech scene.
Over three sunsequent weeks, LX climbed from $0.17 to $0.90 – a 429% increase.
A lesser pundit may be described as lucky, finding these gems in a largely bearish market – especially in the resources sector, which is tough to earn a living in right now.
But Deadlock's Vulture Capitalist system doesn't follow the pack and look to find places to put your RRSP for the next five years, it looks for things the market has walked past and forgotten about, that have inherent value, cash in hand, but a share price that indicates nobody is looking... yet.
And when the market catches up, big things happen.
On Volta, he demonstrated tremendous gold in the ground and a deflated share price. In PMI, same deal, with a ton of cash in hand. In LX, he caught a pre-launch roll that for a few weeks became the Venture Exchange's flavour of the month.
Deadlock brings Moneyball stock picking to the fore, identifying market inefficiencies and capitalizing on them before everyone else, and his tips are available to you, weeks ahead of the market, if you subscribe to his Ticker Trax newsletter RIGHT HERE.
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