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It is funny how this board comes to life while the Yahoo board is dead. The Yahoo board was useless anyway, and its death is probably a good sign. A total lack of interest could mark a bottom. Interest can only increase, and when it does, the stock price will likely increase with it.
My favorites: RNO, AUY, GLE (and GBN, of course)
I mentioned these stocks earlier, and I think it is only fair that I explain why I think these stocks represent excellent value.
RNO - Rio Narcea
Price: $1.89
Shares: 198 million
Market cap: $374 million
Aguablanca nickel mine producing 14 million pounds per year at a cash cost of $2.86 per pound including credits for other metals.
Nickel is currently around $12 per pound.
http://www.kitcometals.com/charts/nickel_historical.html
14 million pounds x $9 /lb = $126 million profit.
Overhead is around $23 million for a net profit of $103 million per year.
The catch is their copper hedge that counts against their earnings every quarter that copper goes up. Copper was up from $2.46 at the end of Q1 to $3.35 at the end of Q2. There should be a derivative loss of (3.35-2.46) x 21.5 = $19 million. I expect this will cancel out all their nickel profits for the quarter. The company delivers 2.5 million pounds on the hedge per quarter, so the hedge will not be completely gone for 2.5 years.
They also have the Tasiast gold mine coming on line in 2008. They expect 105,000 oz/yr at cost of $240 per ounce.
AUY - Yamana
Price: $9.70
Shares: 294 million
Market cap: $2852 million
They expect 800,000 ounces of gold in 2008 at a cash cost of $35 including credit for copper production.
800,000 x $600/oz = $480 million. Subtract around $30 million for overhead for a net profit of $450 million. Note that this needs to be discounted somewhat for the 2 year time frame, development costs, and probably some dilution.
GLE - Glencairn
Price: $.55
Shares: 228 million (could use a reverse split)
Market cap: $125 million
They have already entered production and expect 100,000 ounces per year at a cost of around $327 per ounce.
100,000 x $300/oz = $30 million. Subtract around $15 million for overhead for a net profit of $15 million.
This does not include the mines recently acquired from Yamana.
Marks, I hope you are right about production by 2010. I think the Hollister delays have me a little jaded.
Even if I use a date of 2013 and I discount earnings and add dilution every year, the Burnstone mine, when combined with Hollister, makes Great Basin one of the best values in gold mining.
The other 3 stocks that I think are a good value in the sector are RNO, AUY, and GLE.
box, those are all very good questions.
There is a June 2006 presentation that should answer some of them.
http://www.greatbasingold.com/gbg/Presentations.asp
I am most interested in the time line for Burnstone. If I had to guess, my estimate would be as follows:
2 years for permints and finish feasibility studies
2 years to secure funding
2 years to build mine
1 year to reach full production.
Total = 7 years. That puts production in 2013.
vlispxpert, is that pumper really throwing out $1.00 per share? The ignore feature is really great. That is the kind of talk that makes me say the penny stock market is full of losers, liars, and leaches (present company excluded).
This stock needs to work on getting back to $.05 first. That would be a double. If they could ever get some real revenue from the Kollsman contract, that would be a possibility.
Thin, the fact is you do not really know the dilution because this is a non reporting pink sheet piece of sheet. Why would you trust your money with people who do not even report the basics of the company finances to you?
If I remember correctly, this company DID find a micro diamond a little over a year ago. That find resulted in some press and a nice pump and dump. Some people made money on that, but a lot of people have been holding the bag ever since.
Are shares "cheap" just because they are a lot lower then they were a year ago? If that is the case, there are a whole lot of "cheap" penny stocks. What makes this one special?
dmxpor, I would imagine my posts are tiresome to someone whose alias starts with the stock symbol for this stock. Out of thousands of stocks on the market, is this the best you could do?
I would think the performance of this stock has been much more tiresome.
irony, ha, ha! There is still hope for Loss. Those church girls can be a lot of fun when the service is over.
Unfortunately, that particular church girl seems a little too touchy and too nutty for my taste. I had to put her on ignore.
I am sure you realize that I am NOT criticizing AVTX as being a penny stock scam. I think the revenues are a big disappointment, but this stock does NOT have the qualities that most penny stocks scams have:
- Endless dilution
- Huge losses
- Misleading press releases
- Non reporting (pink sheet)
- Pump and dump
- Lying pumpers on message board
None of that stuff here. Okay, there might be a few obnoxious posters, but they generally do not cross the line into lying.
jolyn, your posts grow tiring, and I fear you are mentally unstable. You are now on ignore.
Things like massive dilution, lack of performance, failure to report, and a crashing stock price make it pretty obvious that a stock is a scam. What more would it take to convince you?
Large cap message boards are boring. This is where the fun is. Ever watch poker on TV. You do not have to lose money playing the game to enjoy it. And you can be much more objective as an observer.
jolyn, I said the penny stock market is riddled with losers, liars, and leaches. I did not include anyone on this board in that category.
I was talking about penny stocks in general. AVTX has been disappointing, but I never said it was a scam. On the contrary, I think that this company is NOT involved in the penny stock scam syndicate.
Please do not put words into my mouth. That is the type of thing a loser, a liar, or a leach would do.
The reason I posted was because someone was making up lies about De Beers being involved with this joke of a company. I have seen the De Beers named dropped a number of times on this message board, and I find that kind of pumping to be repugnant.
How do you short a $.0004 stock? My account only lets me short $5 stocks.
As for the stocks you mention, here are my comments:
I have not bashed AVTX. I have only stated that revenue was extremely disappointing and the company does not seem to be much more than a consultant earning some fees.
DMXP is an obvious stock printing scam that does not even report.
MDFI is another obvious scam that was being pumped by a mass mailing.
The penny stock market is riddled with losers, liars, and leaches. When you attempt to silence someone who is telling the truth about this sleazy market, you are part of the problem. Even participating in this market shows questionable morals. I consider it worse than gambling because in gambling, you know the odds before you play. The penny stock market scammers make their money by hiding the truth. Then they use message board posters to spread their lies.
Jolyn, the penny stock market is generally a drain on the economy. It does not produce enough successful companies to cover the losses on all the failures. It is the equivalent of a casino where the house keeps a very large cut.
You can defend penny stocks and blame all the problems on market makers and naked shorts, but that does not change the fact that penny stocks in general are for losers, liars, and leaches. For you to make $1, someone else has to lose $2. That is an immoral game.
Do you have morals?
Jolyn, you are yet another poster who seems so concerned about how I spend my time. I much rather spend my time speaking the truth rather than living in a fantasy world where penny stock scams are all wonderful investments.
As for what you do with your DMXP, I could not care less. It is your money. You can blow it on whatever you want. Where I draw the line is when people start making up lies on message boards in order to trick others into buying a scam. Do you have morals?
Why is it that people like you never discuss the merits of the argument? Instead you engage in a physiological evaluation. It seems everyone is a shrink. Do you really care what I do with my time? Of course not. You just want me to go away because I tell the truth about penny stock scams, and you cannot handle the truth.
It sounds like you are the one bitching and moaning. I am just pointing out the truth. Can you handle the truth?
osger, actually, I cannot really complain. A year ago I bought this stock at $.0031 and sold at $.004 for a decent profit. Since then the stock has been a disaster. I have a feeling the dilution has been massive while at the same time the exploration has been pathetic.
It is sad that even a 1:100 reverse split would still put this junk under a dime. It is also sad that people feel the need to spread lies in order to boost the stock price.
I am not saying that this stock will not rally big. It is ripe for a big pump and dump. Remember when they rallied that CMKX scam from $.0001 to $.0010? There is no shortage of fools who love to pile into hot penny stocks.
Message board rumors ... are usually just lies.
There is absolutely ZERO evidence that De Beers has any interest whatsoever in this joke of a company.
Trucks has been using this "rumor" on this message board since he came here. I find this type of posting to be irresponsible and repugnant.
If this company has something real, fine, the stock will go up. So far all this company has shown it can do is waste time, print shares, and stay on the Pink Sheets where it does not have to report anything to share holders.
Pumping the stock based on lies and throwing out a ridiculous stock price just makes you look like a scam artist.
loss, very few people make money on penny stocks. Those who do are usually just lucky on a couple big jackpots. There are a number of reasons that penny stocks in general are a terrible investment. Here are a few:
- Many penny stocks are outright scams.
- There is a penny stock Scam Syndicate that will pump and dump in order to drain money out of the market.
- Even the penny stocks that are not outright scams tend to endlessly lose money. Endless losses means endless dilution.
- You will only hear about a penny stock when it is "hot". The few penny stocks that do offer promise will fly below the radar until the insiders have loaded up.
- A small cap company with a real business plan will attract private investment and will not have a need to go public. The good small companies end up in private hands while all the garbage gets dumped on the penny stock market.
The only real value in any stock is the dividends that it will eventually pay. The vast majority of penny stocks will never pay a dividend and never earn a profit. That means they are essentially worthless.
They have limited the float and done a lot of marketing to get the price up to this ridiculous level.
179 million shares x $3.40 = $609 million market cap. Company had a loss of $817k on revenue of $6k last quarter.
I saw this being pumped in "Bob Carlson's Retirement Watch". This stock looks like grossly over valued money losing garbage to me. Their strategy is pretty much a pipe dream. They have no evidence that their system can penetrate the market.
What they claim to be doing is setting up a medical database. There is nothing special about that concept. It is probably much better suited to a large computer company like Oracle or IBM. Why would anyone trust some OTC BB company with their medical records? This company has only had its name since November 2005.
Cyto, only time will tell if this company can ever earn some real profits. In the mean time, I have one more complaint about Ball. Over a year ago, Ball stated this in the quarterly report:
"the use of royalty income... The priorities for the use funds are: (1) New product development, (2) Reduction of short term debt, (3) Corporation buyback of common stock, and (4) Dividends to shareholders. The buyback option is based upon the market value of AVTX common. The priority between stock buyback and dividends will be reviewed and updated as required."
This statement gave the false impression that there would be substantial earnings in the near future. Here we are a year later, and this company has not had one single profitable quarter. This statement was misleading at best. I consider it somewhat deceitful.
Cyto, I have no doubt that sales will increase with EVS2. The problem is the amount of increase will have to be extraordinary for this company to start earning some decent profits. I just do not see much evidence that those kind of sales gains can be expected. It looks to me like the best this company can hope for at this point is being able to cover expenses, and even that might be a couple of years away.
I am not saying it is impossible for the increase in sales necessary to make this a viable company. I just think it is a poor risk/reward based on the results we have seen so far.
The numbers support Loss_slayer
I posted this on RB, but I think it is worth repeating here because of the points made by Loss. I fully understand Loss' frustration with this company because the numbers reported have been pathetic. All the personal attacks in the world cannot change the SEC filings.
I honestly do not see how anyone could read the last quarterly report and be optimistic about this company. The numbers are not good.
Revenue: $4,800
Expenses: $24,900
Loss: ($20,100)
Even if revenue increases 4 fold as projected, the numbers still paint a bleak picture:
Revenue: $19,900
Expenses: $24,900
Loss: ($5,700)
To be optimistic, what if revenue increases 8 fold over the next few years?
Revenue: $39,800
Expenses: $24,900
Profit: $14,900
Profit/year: $60 k
Shares: 66 million
Price: $.024
Market cap: $1.6 million
P/E: 27
A P/E of 27 is NOT a bargain by any means, especially when you are looking out 3-4 years with a best case scenario.
In my opinion, the royalties this company is receiving are very disappointing. I think Ball misled investors in that he did not provide any guidance whatsoever on the royalty structure until AFTER it was painfully obvious that the royalties were extremely low. I do not see how this company deserves a market cap of $1.6 million, and I do not see why it even publicly trades. This is not really a company; it is just a consultant earning some fees.
Construction at Burnstone project expected to start in July
This is moving much faster than I expected. Now that Ferdi Dippenaar is in charge, it seems there is a new sense of urgency to develop their properties. Even Hecla seems to be making progress.
http://www.miningweekly.co.za/min/news/today/?show=88073#
Construction at Burnstone project expected to start in July
Published: 2006/06/23
Author: Terence Creamer
Creamer Media's Mining Weekly Online
Gold-development company Great Basin Gold (GBG), of Canada, is ready to proceed with initial development of the R1-billion Burnstone gold project, near Balfour, in Mpumalanga, and is awaiting only the necessary permits from the Department of Minerals and Energy (DME) before proceeding to first blast.
Located in the South Rand area of the Witwatersrand Basin, Burnstone is situated on portions of 34 farms, 80 km on a main road from South Africa’s golden capital, Johannesburg. The basin was first identified in 1887 and the Burnstone property has been drilled intermittently since the 1970s. But more intense interrogation only truly began after the prospect’s acquisition by GBG in late 2002. Since January 2003, a total of 125 090 m of core has been drilled from 261 holes into the resource area. This process has unearthed a proved initial resource of 15,1-million tons, grading at 4,61 g/t.
The priority now, though, is to move more aggressively toward construction and production, with high-profile South African mining personality and former Harmony Gold marketing director Ferdi Dippenaar having been recently appointed CEO to drive this programme.
He is prioritising the assembly of a high-calibre team to deliver the project and tells Mining Weekly exclusively that he is optimistic that project work will get under way sometime in July.
Accelerating development
Dippenaar sees his main role as that of accelerating the development of a prospect now viewed as a company maker. He says the deposit has been well interrogated, pointing out that a technical report and final feasibility study was completed in May. In addition, funding for the project is available, with the Toronto Stock Exchange (TSX)-listed company having raised C$35-million (about R200-million) earlier in the year. Dippenaar says this money should be sufficient for the first two years of development and will facilitate the start of decline construction and take the project to first intersection.
Burnstone is envisaged as a typical long-life South African gold mine, with its geology reportedly mirroring that of Harmony’s Evander mine, a few kilometres away. In fact, a toll-treatment relationship is being considered with Evander in order to moderate surface- infrastructure costs. It is anticipated that, in the first phase, the mine will produce about 214 000 oz/y over a life-of-mine of 14 years. The cash costs are estimated at $254/oz and total costs at $314/oz.
Its main distinguishing feature, though, is that GBG plans to start mining from a decline at 250 m below surface, which, in South Africa, is extremely shallow. Another big advantage lies in the fact that it is virgin operation, allowing for the latest innovations, technologies and people structures to be introduced, a factor that the company is keen to maximise.
Funding in hand, JSE listing seen as strategic
Various further funding options are under review, including the deployment of cash flows from its Ivanhoe project, in Nevada, which is now under development. The project is a high-grade, short-life joint venture on the famous Carlin Trend, in the US, where the company is anticipating costs of around $150/oz.
Dippenaar stresses that, during construction, risk or equity funding will be GBG’s preferred financing route, as debt financing would inevitably result in hedging commitments. “Shareholders have not had the full value of their investment, and to hedge away the future upside is probably not the way to go,” says Dippenaar, who was part of the rabidly antihedging core while at Harmony. “We are on the realising-value curve as we begin developing the mine, so we do not want to dilute shareholders, especially since we don’t need the funding.” This desire not to dilute shareholders will be sustained even as the company pursues a secondary listing on the JSE, being tackled in light of significant interest from South African retail and institutional investors. “We also had some interest from European companies that traditionally trade on the JSE,” reports legal and compliance VP Willie Beckmann, who joined Dippenaar from Harmony earlier this year. For now, the JSE listing will provide a further funding mechanism through which GBG can structure and fund opportunities in Burnstone, thereby facilitating growth. “But it must be emphasised that the listing will not include an invitation to subscribe for shares in GBG. It will merely be the introduction of GBG into the ‘gold mining’ sector of the JSE,” Beckmann explains, admiting that it could be a significant future funding vehicle. Interestingly, GBG’s listing preparations are being supported by JP Morgan, a company employed by Gold Fields in 2004 to aggressively fend off the hostile advances of Harmony, which had been orchestrated, in part, by Dippenaar. In an unrelated, but also somewhat ironic twist, it appears, too, that the Burnstone project is subject to a sliding-scale royalty payable to Gold Fields itself. But this may be circumvented by South Africa’s new minerals regime and the impending royalty legislation.
Beckmann is optimistic that the listing process will culminate in Great Basin’s entry to the South African gold board sometime in late June or early July. He says the listing process has been smoothed by dint of the company’s listing on the TSX, whose compliance criteria are compatible with those of the JSE.
Prelisting documentation is reportedly being finalised and even though it involves listing as a foreign entity and the foreign-exchange issues that are conjured up, it is not expected that the South African Reserve Bank will raise any serious impediments.
Dippenaar believes the secondary listing will, ultimately, add liquidity to the company, whose TSX and Amex shares are attracting renewed investor interest. In the last five months, the company has traded an average of 700 000 shares a day, which is about 0,5% of its market capitalisation.
This said, GBG would need to be creative in ensuring that there are indeed some shares available for the South African investment community. It is, thus, considering a simultaneous American Depository Receipt programme, while talking to South African shareholders who hold the shares offshore and who might prefer to have the shares on the JSE.
Also acquisitive
“What we could also do is to use the listing here to issue shares in pursuing black economic empowerment or other potential mineral-rights transactions,” Dippenaar discloses, revealing that the company is interested in several acquisitions, mostly on the African continent. Exploration manager: Southern Africa Gernot Wober, a Canadian geologist who claims to have been prospecting since the age of 16, is optimistic about the company’s prospects in South Africa and the rest of Africa, hinting at the Democratic Republic of Congo as a likely priority.
At present, Tranter Investments, headed by well-known black mining personality Sipho Nkosi, is the company’s empowerment partner. The deal with Tranter gives it an option to participate in Burnstone on completion of the bankable feasibility, itself concluded in May. “We are finalising the details of the participation, and hope to make an announcement soon,” Dippenaar reports.
In addition, Dawie Mostert, also previously from Harmony and now vice-president of human capital, is looking at employment and empowerment solutions that involve communities surrounding Burnstone. He tells Mining Weekly that GBG is looking to introduce modern labour practices at the mine, which could ultimately employ as many as 2 000 people. The plan, as currently envisaged, is to source labour from the surrounding communities and immediately integrate them into a modern work-practice environment. “The big advantage here is that we will institutionalise future work methodology, using known best practices as we can truly start with a clean slate. We will also be drawing lessons from Nevada, in terms of shift structures.” Interestingly, Dippenaar reports that the mine will not embrace current conops practices, which were so controversially deployed at Harmony during the last months of his tenure. “We will have two specific full production shifts, optimising the service delivery and ‘off’ shift arrangements. From Nevada we are learning a few technical lessons as well as some tips on people productivity,” he states. Mostert is to be supported by Boniface Ngarachu, who is a specialist in organisational-effectiveness, having facilitated change leadership techniques with companies throughout Africa and in a diverse range of industries.
R1bn full capital commitment expected
As for the harder issue of project implementation, the team is relying on COO Johan Oelofse and Josiah Mashigo. Mashigo, a mining engineer, previously had leadership positions at the giant Kloof and Driefontein mines, while Oelofse, previously of Anglovaal and instrumental in the establishment of the ultramodern Nkomati nickel mine, has returned to South Africa after participating in mining projects in Uzbekistan and Kazakhstan, China, Tajikistan, Indonesia and the DRC.
The full capital commitment is likely to be about R1-billion, with R800-million for construction and R223-million for life-of-mine expenditure. The bulk of the capital will be spent in the first five years, hereafter expenditure decreasing to a level of maintenance capital.
The main items of expenditure over the life-of-mine are the construction of the decline (R105-million), associated underground development (R699-milllion), metallurgical plant (R160-million), a tailings facility (R37-million) and the main water supply (R15-million).
Current thinking is to work on the decline as soon as the permitting has been completed, with the R105-million anticipated cost including the purchase of the farms on which the infrastructure will be constructed. Great Basin plans to develop the decline itself, in alliance with suppliers of equipment and consumables.
Wober is enthused by the geological potential of the greater South Rand Basin, arguing that the resource is shallow compared to the rest of the Wits Basin, starting at 250 m in the initial area, the subject of a bankable feasibility study, and falling to around 800 m.
“But even though the project involves the sinking of a decline, which is shallower and simpler than a conventional vertical shaft, it still takes time. But we are looking at creative ways to shorten the time taken to get the process under way,” Oelofse reports.
Loose ends being tied
Outstanding is the issuing of the prospecting rights, but Beckmann says that the company has submitted all relevant applications in accordance with the relevant legislation and has so far been granted one by the department. The major right, which would facilitate the start of construction, is reportedly near finalisation and an outcome is anticipated soon.
“We applied for the conversion of the old-order prospecting rights relating to Burnstone in 2005 and these have been accepted by the DME. But, as from March, we intensified the effort to ensure that our applications are given the necessary attention within the required DME processes,” Beckmann reveals.
Dippenaar, who initially became aware of the project when Great Basin requested access to Harmony’s Evander mine in a bid to gain a better understanding of the Burnstone orebody, is clearly anxious to get the process moving.
“GBG is at a unique stage of its development. It has two projects, which have progressed to the extent that production from them is more of a reality than what it was a few months ago. The project in Nevada is actually ahead of schedule and we are intersecting the high-grade gold and silver vein systems that we were expecting. The Burnstone feasibility study has been completed, and we hope to get the project under way, as soon as we have the permitting process completed. That will see the transition of GBG from an exploration and development company, to a gold producer,” he avers, adding that the strategy is to bring the two projects into production as quickly as possible.
“They are robust and, as a base, are probably not bad to start the further growth of the company,” he adds, stressing that he would like to develop GBG into a “complete gold-mining company”, unashamedly borrowing the phrase from former rival Gold Fields.
He has no intention, however, of turning GBG into a so-called “bottom feeder”, stressing that its acquisitions will eschew marginal opportunities and focus, instead, on projects that are similar or better than the two under development. “We would be looking at increasing the diversity of the assets portfolio of GBG,” he reports. But for now, Ivanhoe and, more particularly, Burnstone are being given priority attention. “Burnstone is extremely important. It has a huge, shallow resource, which can be turned to account with a relatively modest capital budget. In addition, the project still has huge exploration potential, that we will be unlocking over the next 12 months. We then see Burnstone forming the base of GBG’s production profile for the next 12 to 16 years,” Dippenaar concludes.
ADSD = Dilution machine scam! Warning, QTFV - QTFI - ADDI - ADSD is a dilution machine scam. All this company is able to do is print shares. Every once in a while management will lie to investors to get the stock price up, but even that has not happened in a long time.
Avoid this scam like the plague!
Dilution machine scam! Warning, QTFV - QTFI - ADDI - ADSD is a dilution machine scam. All this company is able to do is print shares. Every once in a while management will lie to investors to get the stock price up, but even that has not happened in a long time.
Avoid this scam like the plague!
Pink Sheets scams may give investors nightmares
By Matt Krantz, USA TODAY
11/10/2005
Old scams never die. They just get new names and snare fresh victims.
That vicious cycle is powering a renaissance in pump-and-dump schemes on the Pink Sheets, the Wild West of Wall Street that is a breeding ground for penny-stock scams.
Pink Sheets used to literally be pink sheets of paper that brokers used to trade stocks that didn't meet the listing requirements of an exchange, such as the New York Stock Exchange. Now, it's the label for a computerized network that allows investors and brokers to buy and sell stocks without getting near an actual stock exchange.
The scant regulatory oversight that allowed penny-stock scams to rise in the first place is enabling their comeback. And they're surfacing with a vengeance because of technology that makes it easy to reach millions of investors via e-mail and instant messages on cellphones.
Five years of ho-hum returns from legitimate stocks such as Microsoft and General Electric are adding to the conducive atmosphere. People who want high-octane investments are more receptive to these get-rich-quick schemes pitching trendy investments ranging from fitness centers to alternative energy plays such as wind farms and biodiesel.
Last year, the number of companies listed on the Pink Sheets hit a record 4,570, and trading volume hit 820 billion shares — more than quadruple the level the year before, according to PinkSheets.com. This year is on track for another record, with 4,781 companies listed and a dollar volume of $47.4 billion through Nov. 9, on pace to beat last year's $50.7 billion volume.
Not all Pink Sheets-listed stocks are scams. But amid that flood of activity on the Pink Sheets is an increasing number of scamsters trying to lure fresh prey with promising pitches, say securities lawyers and watchdogs. "I've been seeing more of them," says Hartley Bernstein, of StockPatrol.com. "I get a dozen a day."
A typical pump-and-dump scheme involves somebody making falsely optimistic claims (the pump) via a press release or an e-mail about a shell company whose shares trade for a few cents. Unsuspecting investors buy the "penny stock," causing its price to double, triple or more. Then, scamsters sell shares (the dump) at a profit, leaving other investors holding what turns out to be nearly worthless stock.
Regulators shake their heads at the lengths some go to snare victims. "Some of these bad guys rig the Internet. You can rig the Internet to lure investors into a false sense of security," says Cameron Funkhouser, NASD's senior vice president of market regulation. For instance, some create a fake message board where it appears dozens of investors are gushing about a company's hot prospects.
Technological advances might have made the scams more effective, but many wouldn't work if it weren't for the Pink Sheets. Unlike stock exchanges such as the NYSE, the Pink Sheets system is an informal computerized network that allows brokers to trade stocks and compare quotes. When an investor wants to buy a stock on the Pink Sheets, they contact a broker, who can use a computer to see what the stock is trading for, then contact another broker who facilitates buying and selling in that stock.
Stocks on the Pink Sheets system fall between the cracks of regulation. The NASD regulates brokers, not the stocks they trade. The Securities and Exchange Commission, with few exceptions, regulates only companies with more than $10 million in assets and more than 500 shareholders. Virtually no stocks traded on the Pink Sheets clear that bar.
"As a practical matter, smaller companies tend to fall below the SEC's radar and state regulators'," says John Coffee, securities law professor at Columbia University. "They're too small."
That means a lot of latitude for anyone who wants to abuse the system. Only when a penny-stock scam runs blatantly afoul of the law or violates anti-fraud provisions can the SEC get involved.
The SEC has not released the number of penny-stock scams it has found on the Pink Sheets this year, which makes the boom hard to quantify. But a few of the SEC's recent enforcements show the range of tactics used to lure investors:
Questionable correspondences.
In July, the SEC charged Joshua Yafa, a stock promoter in Florida, with fabricating a fax that appeared to be a private letter from a broker urging a client to buy shares of Pink Sheets-listed stock AVL Global because it was poised to triple in value. The fax was transmitted to thousands in late 2004. The shares jumped 25% on heavy volume after the fax went out, and the SEC's lawsuit alleges that gave Yafa a chance to sell at a $300,000 profit. Yafa's attorney did not return calls for comment.
At the same time, the SEC charged Michael O'Brien Pickens, son of oil tycoon T. Boone Pickens, with using a version of Yafa's tactic to pitch three stocks, two of which traded on the Pink Sheets. The SEC claims the younger Pickens also pocketed $300,000 on the alleged scam. He might never have come to regulators' attention if the fax service he used hadn't unwittingly sent it to one of the SEC's California offices. Pickens' attorney did not return calls for comment.
Multimedia assaults.
In February, the SEC charged Donald Oehmke, Bryan Kos and five partners with putting out false press releases, faxes, e-mails, voice mails, websites and videos to promote two Pink Sheets-listed penny stocks. One claimed to be a Latin American staffing company and the other, a fitness center operator. The SEC said the press releases were false and that the president of the Latin American recruiting firm was in on the scam. The SEC also said the second company didn't own a single fitness center.
Even so, buzz created around the stocks drove them up and allowed the men to profit by more than $27 million, the SEC alleges. Oehmke's attorney declined to comment. Kos' attorney says his client was fooled by the company's management and believed the statements he made about the stock were correct.
Bogus "research reports."
Scamsters often enlist the help of firms that create bogus research reports designed to look like they're from legitimate brokerages. Other times, the fraudsters make the "reports" themselves and disguise that key fact from investors.
That's what the SEC in September charged two people with doing when they promoted what was described as a website construction company. The SEC accused George Bogle and Peter Emmanuel with putting out a report that appeared to be from an independent stock analyst and that said the stock was "our most aggressive stock buy recommendation." But it was based on false information, the SEC says. Nonetheless, the stock jumped 120%, and the two profited nearly $500,000 by selling the shares amid the good buzz, the SEC says.
Emmanuel thought he was just repeating reliable already public information on the stock, his attorney says. Bogle's attorney didn't return calls.
Anyone who isn't confident promoting a Pink Sheets-listed stock can get help. Take Jonathan Lebed, who was fined $285,000 in 2000 by the SEC for buying stocks mainly listed on the NASD's "Bulletin Board" market, spreading false messages to promote the stocks, then dumping them. Lebed paid the fine without admitting or denying guilt. Now, he concentrates his efforts on promoting Pink Sheets-listed stocks. He discloses on his website that he gets paid by companies, often $25,000 a month, for "investor relations" contracts to promote certain Pink Sheets-listed stocks. He often sends e-mails touting events at the company. Several e-mails sent to Lebed were not answered, and no phone number could be found for him or his offices.
Reverse mergers.
It's easy for anyone to "take their company public," thanks to the fact that there are hundreds of shell companies trading on the Pink Sheets that exist on paper but have no assets.
Consider Wind Farming, created when William Telander bought a Pink Sheets-listed company called Applied Research. Applied had no assets, just a Pink Sheets listing, according to an SEC complaint filed this year. After buying Applied, Telander changed the name to Wind Farming, which allowed him to avoid regulatory scrutiny because he took over another company rather than issuing new stock. Starting as far back as summer 2004, Telander began issuing trumped-up and "false" press releases extolling Applied's success, the SEC complaint says, including fabricated business contracts. Trading volume soared from basically nothing to more than a million shares a day, the SEC says, allowing Telander and a group of partners to make hundreds of thousands selling shares. The attorney representing Wind Farming declined to comment.
Problems don't occur only on the Pink Sheets. Enron traded on the NYSE. WorldCom was on the Nasdaq. But companies on the Pink Sheets get greater freedom because there are no listing requirements and there's no dedicated regulator. Companies don't have to meet any standards to be on the Pink Sheets and don't have to put out financial statements. Even Sarbanes-Oxley rules designed to clamp down on corporate games don't apply to Pink Sheets-listed companies.
The SEC usually gets involved only if scamsters get so greedy that they issue additional shares rather than just pumping and dumping existing shares, says Gidon Caine, securities lawyer at Dechert LLP.
Meanwhile, Pink Sheets stocks have the appearance of being like any other stock. Even mainstream websites, such as USATODAY.com and Yahoo Finance, provide quotes on Pink Sheets stocks that give them the appearance of being regular exchange-traded shares.
Some are hopeful that Pink Sheets scams can be curbed. The SEC has been moving to clean up the Pink Sheets where it can, especially by targeting dormant listings of shell companies. For instance, in July it suspended trading in three Pink Sheets-listed stocks, Asia4Sale.com, Vision Group and Idoleyez, saying they were not providing accurate financial data.
The SEC also tightened rules by forcing shell companies to release regulatory filings after being taken over.
These moves will help clamp down on these companies. But the spate of recent enforcement actions, for one, should serve as a reminder to investors to do their homework. "If you can't get a full picture of what a company is doing, you should stay away from it," says Cromwell Coulson, CEO of PinkSheets.com.
Pink Sheets scams may give investors nightmares
By Matt Krantz, USA TODAY
11/10/2005
Old scams never die. They just get new names and snare fresh victims.
That vicious cycle is powering a renaissance in pump-and-dump schemes on the Pink Sheets, the Wild West of Wall Street that is a breeding ground for penny-stock scams.
Pink Sheets used to literally be pink sheets of paper that brokers used to trade stocks that didn't meet the listing requirements of an exchange, such as the New York Stock Exchange. Now, it's the label for a computerized network that allows investors and brokers to buy and sell stocks without getting near an actual stock exchange.
The scant regulatory oversight that allowed penny-stock scams to rise in the first place is enabling their comeback. And they're surfacing with a vengeance because of technology that makes it easy to reach millions of investors via e-mail and instant messages on cellphones.
Five years of ho-hum returns from legitimate stocks such as Microsoft and General Electric are adding to the conducive atmosphere. People who want high-octane investments are more receptive to these get-rich-quick schemes pitching trendy investments ranging from fitness centers to alternative energy plays such as wind farms and biodiesel.
Last year, the number of companies listed on the Pink Sheets hit a record 4,570, and trading volume hit 820 billion shares — more than quadruple the level the year before, according to PinkSheets.com. This year is on track for another record, with 4,781 companies listed and a dollar volume of $47.4 billion through Nov. 9, on pace to beat last year's $50.7 billion volume.
Not all Pink Sheets-listed stocks are scams. But amid that flood of activity on the Pink Sheets is an increasing number of scamsters trying to lure fresh prey with promising pitches, say securities lawyers and watchdogs. "I've been seeing more of them," says Hartley Bernstein, of StockPatrol.com. "I get a dozen a day."
A typical pump-and-dump scheme involves somebody making falsely optimistic claims (the pump) via a press release or an e-mail about a shell company whose shares trade for a few cents. Unsuspecting investors buy the "penny stock," causing its price to double, triple or more. Then, scamsters sell shares (the dump) at a profit, leaving other investors holding what turns out to be nearly worthless stock.
Regulators shake their heads at the lengths some go to snare victims. "Some of these bad guys rig the Internet. You can rig the Internet to lure investors into a false sense of security," says Cameron Funkhouser, NASD's senior vice president of market regulation. For instance, some create a fake message board where it appears dozens of investors are gushing about a company's hot prospects.
Technological advances might have made the scams more effective, but many wouldn't work if it weren't for the Pink Sheets. Unlike stock exchanges such as the NYSE, the Pink Sheets system is an informal computerized network that allows brokers to trade stocks and compare quotes. When an investor wants to buy a stock on the Pink Sheets, they contact a broker, who can use a computer to see what the stock is trading for, then contact another broker who facilitates buying and selling in that stock.
Stocks on the Pink Sheets system fall between the cracks of regulation. The NASD regulates brokers, not the stocks they trade. The Securities and Exchange Commission, with few exceptions, regulates only companies with more than $10 million in assets and more than 500 shareholders. Virtually no stocks traded on the Pink Sheets clear that bar.
"As a practical matter, smaller companies tend to fall below the SEC's radar and state regulators'," says John Coffee, securities law professor at Columbia University. "They're too small."
That means a lot of latitude for anyone who wants to abuse the system. Only when a penny-stock scam runs blatantly afoul of the law or violates anti-fraud provisions can the SEC get involved.
The SEC has not released the number of penny-stock scams it has found on the Pink Sheets this year, which makes the boom hard to quantify. But a few of the SEC's recent enforcements show the range of tactics used to lure investors:
Questionable correspondences.
In July, the SEC charged Joshua Yafa, a stock promoter in Florida, with fabricating a fax that appeared to be a private letter from a broker urging a client to buy shares of Pink Sheets-listed stock AVL Global because it was poised to triple in value. The fax was transmitted to thousands in late 2004. The shares jumped 25% on heavy volume after the fax went out, and the SEC's lawsuit alleges that gave Yafa a chance to sell at a $300,000 profit. Yafa's attorney did not return calls for comment.
At the same time, the SEC charged Michael O'Brien Pickens, son of oil tycoon T. Boone Pickens, with using a version of Yafa's tactic to pitch three stocks, two of which traded on the Pink Sheets. The SEC claims the younger Pickens also pocketed $300,000 on the alleged scam. He might never have come to regulators' attention if the fax service he used hadn't unwittingly sent it to one of the SEC's California offices. Pickens' attorney did not return calls for comment.
Multimedia assaults.
In February, the SEC charged Donald Oehmke, Bryan Kos and five partners with putting out false press releases, faxes, e-mails, voice mails, websites and videos to promote two Pink Sheets-listed penny stocks. One claimed to be a Latin American staffing company and the other, a fitness center operator. The SEC said the press releases were false and that the president of the Latin American recruiting firm was in on the scam. The SEC also said the second company didn't own a single fitness center.
Even so, buzz created around the stocks drove them up and allowed the men to profit by more than $27 million, the SEC alleges. Oehmke's attorney declined to comment. Kos' attorney says his client was fooled by the company's management and believed the statements he made about the stock were correct.
Bogus "research reports."
Scamsters often enlist the help of firms that create bogus research reports designed to look like they're from legitimate brokerages. Other times, the fraudsters make the "reports" themselves and disguise that key fact from investors.
That's what the SEC in September charged two people with doing when they promoted what was described as a website construction company. The SEC accused George Bogle and Peter Emmanuel with putting out a report that appeared to be from an independent stock analyst and that said the stock was "our most aggressive stock buy recommendation." But it was based on false information, the SEC says. Nonetheless, the stock jumped 120%, and the two profited nearly $500,000 by selling the shares amid the good buzz, the SEC says.
Emmanuel thought he was just repeating reliable already public information on the stock, his attorney says. Bogle's attorney didn't return calls.
Anyone who isn't confident promoting a Pink Sheets-listed stock can get help. Take Jonathan Lebed, who was fined $285,000 in 2000 by the SEC for buying stocks mainly listed on the NASD's "Bulletin Board" market, spreading false messages to promote the stocks, then dumping them. Lebed paid the fine without admitting or denying guilt. Now, he concentrates his efforts on promoting Pink Sheets-listed stocks. He discloses on his website that he gets paid by companies, often $25,000 a month, for "investor relations" contracts to promote certain Pink Sheets-listed stocks. He often sends e-mails touting events at the company. Several e-mails sent to Lebed were not answered, and no phone number could be found for him or his offices.
Reverse mergers.
It's easy for anyone to "take their company public," thanks to the fact that there are hundreds of shell companies trading on the Pink Sheets that exist on paper but have no assets.
Consider Wind Farming, created when William Telander bought a Pink Sheets-listed company called Applied Research. Applied had no assets, just a Pink Sheets listing, according to an SEC complaint filed this year. After buying Applied, Telander changed the name to Wind Farming, which allowed him to avoid regulatory scrutiny because he took over another company rather than issuing new stock. Starting as far back as summer 2004, Telander began issuing trumped-up and "false" press releases extolling Applied's success, the SEC complaint says, including fabricated business contracts. Trading volume soared from basically nothing to more than a million shares a day, the SEC says, allowing Telander and a group of partners to make hundreds of thousands selling shares. The attorney representing Wind Farming declined to comment.
Problems don't occur only on the Pink Sheets. Enron traded on the NYSE. WorldCom was on the Nasdaq. But companies on the Pink Sheets get greater freedom because there are no listing requirements and there's no dedicated regulator. Companies don't have to meet any standards to be on the Pink Sheets and don't have to put out financial statements. Even Sarbanes-Oxley rules designed to clamp down on corporate games don't apply to Pink Sheets-listed companies.
The SEC usually gets involved only if scamsters get so greedy that they issue additional shares rather than just pumping and dumping existing shares, says Gidon Caine, securities lawyer at Dechert LLP.
Meanwhile, Pink Sheets stocks have the appearance of being like any other stock. Even mainstream websites, such as USATODAY.com and Yahoo Finance, provide quotes on Pink Sheets stocks that give them the appearance of being regular exchange-traded shares.
Some are hopeful that Pink Sheets scams can be curbed. The SEC has been moving to clean up the Pink Sheets where it can, especially by targeting dormant listings of shell companies. For instance, in July it suspended trading in three Pink Sheets-listed stocks, Asia4Sale.com, Vision Group and Idoleyez, saying they were not providing accurate financial data.
The SEC also tightened rules by forcing shell companies to release regulatory filings after being taken over.
These moves will help clamp down on these companies. But the spate of recent enforcement actions, for one, should serve as a reminder to investors to do their homework. "If you can't get a full picture of what a company is doing, you should stay away from it," says Cromwell Coulson, CEO of PinkSheets.com.
Thanks, sorta. I will take a look.
Debt free is the way to go. I had to make sacrifices for a while, but now I am able to enjoy zero debt. My car is paid off, I just bought my wife a new car for cash (a Civic), and even the house is paid off. It is wonderful living without the burden of debt.
Meanwhile, the U.S. has a huge government deficit, trade deficit, increasing entitlements such as Social Security and Medicare, mortgage debt, and credit card debt. All this debt is for an economy that cannot even produce consumer products and must import a large percentage of the oil it consumes. Long term, I do not think this is sustainable.
sorta, following the insiders is usually a good idea. I realize the company had debt and no way to profit when prices were low, but bankruptcy always rubs me the wrong way. I look at is as failure by management to plan for the future. Unfortunately, debt is usually a trap. Once companies are in, they never seem to be able to get out.
In fact, I think our whole economy is in a debt trap. If we continue to try to inflate our way out, the metals should continue to do well. I will be buying after this correction seems to be over. I am giving it until the end of the year.
sorta, if the prices were low, they should have mothballed the operation so that it could be re-started at a later date. I view bankruptcy as a trick to steal the company from the share holders. Look at K-Mart as an example. After they stole the company from share holders they all of the sudden realized their assets were worth so much money that they could buy Sears. The insiders made a kiling on that deal at the expense of the investing public.
As for the costs here, they do seem rather high, and the company does not seem to be making much of an effort to address the issue. I agree that there are better places to put money. I will check out Great Panther and War Eagle.
sorta, sorry to hear you are out. The earnings have been disappointing, but not totally unexpected. Companies tend to throw money at new mining operations in order to make the production numbers. The cost cutting usually comes later. I think there is a decent chance that the company will get its act together.
I am still concerned, however, that the company was poorly managed before the bankruptcy. The bankruptcy was obviously not in the best interest of share holders, but it sure was a good way for management and insiders to gain ownership of the "new" company. The company still seems to be showing the same lack of concern for the share holders. They should be reporting to share holders monthly on production and costs. Instead share holders are kept in the dark until the quarterly reports are finally published. I am not sure if I trust these guys.
Mach, that is excellent information on Delphi, and I will admit it is an interesting stock. I made a small profit on it a few months ago, but I obviously should have held it longer.
Unfortunately, my questions were related to GPGD. This is the company that people do not seem to know much about. Sorry for the confusion.
Ed, congradulations on a pretty good post. You left off a couple of digits on the phone number, though.
That reminds me of the Tom Hanks movie "Big". When Josh is going on his interview at the toy company he did not know his social security number, so his friend gave him his locker combination. The locker combination only consisted of 6 digits which is 3 short of a social security number. Then when Josh is in the interview, the guy says that there are a couple of numbers missing from his social security number. Josh tells him, "Oh, twelve." So the interviewer adds "012", and the problem is solved.
mach, I would be interested to hear what is going on with this company. How many shares have they printed? What is known about their property? Who is their CEO? Where is their office? What is their phone number and e-mail address? What is the link to their web site?
Without information like this, how do you know if this is even a real company? UDVE was a scam, and there is nothing to show this company is any different.
lh, I came to this board to learn about GPGD. I have been following this thing ever since I realized UDVE was a scam. Unfortunately, no one on this board really knows anything about the company, and the board has been hijacked by Alex the idiot. Alex is now on ignore so I do not have to listen to that moron.
Maybe someone will eventually find out some real information about this company. Until then, they board will be cluttered with chart analysis, rumors, and other foolishness.
This kind of pumping is just plain pathetic and sad.
This stock is a pink sheet piece of sheet. Share holders know close to nothing about the company. It might not even be a real company. UDVE was a big scam, and there is nothing to show that this is any different.
Good article. I still do not understand why this company does not give more operational updates. Why are they hiring a promotion company if they do not bother to promote the stock themselves with some informative press releases?
Do you think the purpose of the stock promotion is so that they can sell more shares?
sorta, do you have any indication that earnings will be better this quarter? As far as I can tell the company has been mute on the issue.
I have been waiting a long time to re-purchase some shares, but I only want them if the company can deliver in its promises.