The Calandra Report: True North Gems faces a 'special situation'

Thom Calandra
1 Comment|March 28, 2014

Special situation: I have owned shares of True North Gems (TSX:V.TGX, Stock Forum) for at least three years. The Greenland developer of an emerald and sapphire mine is a spring summer and autumn away from actual cash flow there, CEO Nick Houghton told me today on the telephone from Vancouver, Canada.
 
That and the 30-year license TGX now has to operate what could become a ruby domination of High Streets everywhere are the good news. The special situation news is the Gutnick factor.
 
A shareholder -- not being a very Goodnik I guess -- and with a LOT OF KIDS, is trying to stave off fiscal distress. Nick our British gemologist says this is a paper sale that has nothing to do with True North's true north, or true worth. I will let Chris Parry at Stockhouse.com tell that story here in this revealing article. The Gutnick/Goodnik seller is using the open market and block trades to lighten an enormous ownership of TGX shares.
 
At 7 cents Canadian, where the shares have declined oh so rapidly after an equally fine run-up earlier in March, True North is worth about $20 million Canadian all-in. I bought another 30,000 shares at about 7 cents today in the hope of one day seeing TGX (and TNGMX in USA) repeat the success of a real gem in the stock market: Australia's Kimberly Diamonds (KDL in Australia).
 
Specialty crop fertilizers: 
EPM Mining Ventures (TSX:V.EPK, Stock Forum): TCR a week ago today transmitted those EPM lines, gathered from a financial analyst with a green thumb. Do I wish the analysis on EPM (EPK in Canada and EPKMF in USA) had been mine?
No. If I wanted to learn more about potash, or sulphate of potash, I'd go live in Calgary.
Which is where the winning analyst lives.
 
I have enough to do keeping up with copper, platinum, zinc (another fertilizer), gold ... and specialty situations in gems, elements, biomedical and elsewhere.
 
My TCR source on Utah potash/brine deposit developer EPM is so hothouse hot, he (yes, he) has two green thumbs. SOP potash is used principally for specialty fruit and veggie crops, plus nuts, berries, beans, cocoa and potatoes.
 
I paid $842 (USA) for my 6,000-odd shares a week ago; today those EPM shares are worth $1,742 (USA).  A 13 percent gain in share price today came amid a sweeping swap of voting shares for nonvoting shares in the company. See reports.
 
The boilerplate on EPM: EPM, through its Peak Minerals Inc., controls mineral leases on more than 124,000 acres on the Sevier Dry Lake property in Millard County, Utah. EPM is targeting the future development and production of Sulfate of Potash (SOP), a premium priced fertilizer used with special crops and soil types, through a cost-effective solar evaporation methodology. 
 
Also: The deck on EPM -- http://epmmining.com/cms/pdf/financials/2014/EPM-Investor-Presentation-2014-02-20.pdf
 
I got this 
****TRIGGER ALERT****
from a respected charting agency just now. New members of our TCR family might want to know that our ability for technical analysis of securities is poor. Our ability to reach out when needed, now that's different. 
 
Here is what the alert (Costa Rica issued) said: 
Gold continues to decline, approaching our key support level at 1280 as mentioned in this week's edition. Gold shares have also been falling triggering some buy orders as well as some stop losses.  
Here's where we stand:
Buy some gold at mkt or ideally near 1280.  Place stops at 2dc below 1280.
 
Unbaked Alaska: Alessandro Bruno is reporting up a storm at InvestorIntel.com. His latest explains the significance of the USA state of Alaska's financial backing for a mining project. See: 
Alaska approves $145 million in financing for Ucore's Bokan-Dotson Ridge Project
 
 
The writing on the wall was set in legislative stone the third week of February.
 
Critics will and should point out that state backing for mineral projects -- in this case rare earth elements -- opens the door to administrative sloppiness, government meddling and perhaps bad international trading behavior. I'll let you decide. Let's keep an eye on the actively traded Alaska miners and prospectors. I own shares of Kristina Walcott's Freegold Ventures.

TCR has another special situation.
 
Four of the five The Calandra Report companies presented in March produced rapid gains. These were Utah potash developer EPM Mining Ventures; Colorado's LKA Gold; Greenland-active True North Gems, Utah property owner American Sands Energy.
A fifth, Bitterroot Resources, delayed its Hail Mary drill assays in Michigan, so we wait until May for data that might validate the platinum group metals prospector's claims in that mining-friendly state. In addition, we also count Sysorex Global as a successful SS; this is the California technology services one we began tagging in November 2013.
 
A special situation is in the eye of its beholder. Investment authors are all over the map on what's special: arbitrage, onetime payouts to shareholders and even death of an executive are tagged as SS. Mostly, a special situation is a large gap in the current value of an investment  vs. what is generally seen as fair value.
 
Best to think of an SS as a zit: what you had on the tip of your teen-tween nose when you were this close to making out the first time. TCR, in deep value mode, regards forced or distress selling as special. This is what happened this week with True North Gems (TGX in Canada), which already is recovering from the fire sale of a Singapore large shareholder.
 
Out latest is also a company I have visited four times in Ghana. Today, a seller, likely a Bank of Montreal fund, unloaded the last of what probably was 600,000 shares of Xtra-Gold Resources (TSX:T.XTG, Stock Forum).
 
Xtra-Gold told me today the company bought 100,000 of the shares and subsequently canceled them. This is part of a program of retiring shares that CEO Paul Zyla and his team started more than a year ago.
 
I bought 12,000 more shares of Xtra-Gold just now (Friday March 28, 2014) at 30 cents Canadian. All in, I own about 220,000 shares.
 
Xtra-Gold is funding its Kibi Gold Belt exploration via the sale of alluvial gold on its properties in Ghana. I have been wed to Xtra-Gold for almost four years.
 
Has Personality: Alex Molyneux of Powertech Uranium/Azarga Resources was recognized at this week's HK Mines & Money confab. See: http://www.scmp.com/business/article/1459889/winners-night. Alex is the former head of SouthGobi, the Mongolia coal operator. We might touch base with Alex in three weeks in Asia.
 
Off To Arizona next week on a copper tour. Then Los Angeles to see a publisher. Two weeks from today: Cambodia. Also in the cards later in April and May: Colombia for El Dovio, a Colombian Mines (TSX:V.CMJ, Stock Forum) property; possibly titanium in Quebec.
 
 

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Investigative
This company has no emeralds. It is a ruby project, or sapphire if the stones not red.
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March 31, 2014
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