Gold Stocks

[sorkasaur]

GOOD NEWS ON THE WAY!
6-10-2014
I sent the "Welcome everyone" article below on 6-3-14 to new investors who responded to my publicly posted article “CORRUPTION, GOLD, CHINA, THE FED AND A TIMELY OPTION.”
I believe this is a particularly timely update discussing the problems faced by the “typical junior” with an introduction to Lion One Metals (LIO) . It is very important for investors to understand that all juniors are not created equal. Like the wealth of the world I believe some juniors fall into the “1%” category offering spectacular potential returns to the fortunate few who own them while the majority of juniors struggle at the bottom of the ladder to just get by.
This past weekend I had the pleasure of hosting Walter Berukoff, the CEO and Founding Father of Lion One Metals in Lincoln Ne. I must say this was a weekend well spent.
For the past three years Wally has built LIO one step at a time just like anyone who has the knowledge and experience gained from developing and playing a part in the development of seven mines in the past. Wally feels now is the perfect time to bring all the pieces together so the investment world can begin to see the potential that lies within.
All of you received an e-mail update at the beginning of April where I wrote about Lion One Metals LIO. When the two updates are combined with recent news releases from the company the overall picture of LIO begins to take shape.
In the next update I will tie all the pieces of the puzzle together where I think you are going to understand exactly why I have nicknamed the Tuvatu project in Fiji “The Envy of the Pacific Rim!” It may take a couple weeks to finish but I assure you the wait will be well worth the time. If successful in my endeavors I believe investors all over the world will begin to hear The Lion ROAR!
Right now we are witnessing the worst bear market in the history of the precious metals markets. Many times getting out of bed in the morning can be a challenge. I also know that times like these create opportunities for investors armed with the proper knowledge to build positions in companies at prices they will find hard to believe down the road.
I have not been compensated to write this article but we are shareholders where our average cost is three times the current price and I am not the least bit concerned. My only regret is the fact that if I had the opportunity to have that money invested at these levels we would then have three times as many shares as we now own. If my thinking is correct on LIO it is not important as to how many times it multiplies in price. The ultimate determining factor in establishing the wealth created from your investment will be the number of shares owned. At $.35/sh the buying power of a dollar will never be greater.
Enjoy the article and remember this was mailed out a week ago to new additions to my e-mail list. As always these are my own opinions and anyone with any questions can reach me at the number and e-mail address below.
Welcome everyone,
The weakness in the Junior Mining Sector for the last three years has created an opportunity for investors like none we have ever seen before. Who could ever have imagined gold would rise to $1,900/oz from below $300/oz, correct to $1,100/oz with junior mining stocks trading at historical all-time lows without a bid in sight.
I think you will find the information I share with you in this article to be very timely. Few investors have been introduced to the company in question and those who have find themselves in a position where they are burdened with more questions than answers right now. This is all about to change as several years of hard work by management come to fruition putting shareholders in a position to receive the long-awaited answers to their questions.
Before I share this fascinating story with you there are a few points I believe are important which investors must understand about the current state of affairs in the Junior Mining Sector; both good and bad!
I believe many juniors will show returns far beyond the realm of what would seem possible today for investors who have the foresight to ignore the games being played with the paper price of gold. Investors who understand that it is only a question of time before the day arrives where out of control spending and the creation of fiat paper come to an end turning the page to a whole new chapter in the precious metal sector.
Those who are able to hold on and build positions will be handsomely rewarded for the pain and suffering endured during the trying times we have right now. Unfortunately these rewards can only accrue in companies who survive the washout currently underway.
HURDLES IN THE JUNIORS!
The last several years have been very challenging for those who own precious metal stocks to both your health as well as your wealth. Prior to this debacle many juniors were successful in advancing projects of merit while proving up resources the market and investing public fail to recognize as gold safely stored in the ground. This overlooked and very valuable resource will be available for future consumption at the discretion of those fortunate few who then own the resource.
Very few investors understand the vital role these undeveloped resources will play in the future as the Producing Countries of the World reject fiat paper as payment for their goods and services from the Consuming Countries of the World. If any of the points I made in my article “CORRUPTION, GOLD, CHINA, THE FED AND LION ONE METALS” come to pass where the day arrives and the ability of the public to acquire physical gold no longer exists, investors only remaining alternative to participate in, what will then be an all-out panic to own gold will be through investments in mining stocks.
Unfortunately, the collapse in share prices and market caps has taken a very serious toll on the industry as access to capital has become virtually non-existent. This has brought the industry to a standstill as the “typical junior” has been stuck in neutral seeking and acquiring cash whenever and wherever possible with mass dilution to shareholders in an attempt to keep the doors open and just pay the bills. As a result good management teams have been forced to downsize to buy time waiting for overall market conditions to improve in order to access capital. The majority of juniors struggle to just exist as ongoing concerns. As a whole this is the #1 hurdle faced in the junior mining sector today.
Many of those companies who, in the end, do survive will be forced to restructure and reverse splits will be common before management teams are able to get back to work. Those companies, with projects of merit, who survive the current restructuring in the industry offer unique opportunities to investors who find themselves in a position to take advantage upon completion of the restructuring.
The irony of the cycle is the fact that once restructuring is complete the “typical junior” is back to where they started; raise capital, move projects forward, raise more capital in hope of developing an economic resource worthy of being put into production by majors who desperately need to acquire additional resources to replace what they have already depleted.
POTENTIAL IN THE JUNIOR MINING SECTOR:
I am a big believer that now is a perfect time to begin building or adding to positions in companies that do not fall into the “typical junior” category. For the past several years the total precious metal sector has been pummeled and many companies are trading with market caps that in no way reflect the value of the assets contained within.
Many juniors with proven resources and projects of merit share the same often-times overlooked benefits of a penny lying on the sidewalk; the difference is we are talking about ten-dollar bills versus a penny in value. Most will not make the effort to bend over to pick up a penny; practically everyone will welcome a chance to snatch a ten-dollar bill up off the ground. In precious metal stocks the gains come in being the first to recognize the difference.
In my opinion junior mining companies standing on the threshold of becoming producing companies where positive cash flow begins and dilution to shareholders is no longer a threat are companies which should be at the top of every investors buy list. These are the companies which stand to make windfall profits as the correction in gold and mining stocks end and the next leg of the bull begins.
I purposely added a section in my last article on Homestake Mines because I believe the same circumstances exist today that prevailed in the depression for Homestake shareholders. If my thinking is correct then Homestake may serve as a classic example to follow for investors who are seeking protection and profit in the uncertain economic times we have going forward.
One must also understand there is a difference between Homestake which was considered a major producing company and junior mining companies which are explorers with no cash flow. If all goes as planned the junior I will introduce you to will cross the threshold into production by the time the economic uncertainties and conspiracy theories become realities.
For those of you who missed the section on Homestake Mines below is a refresher.
HOMESTAKE MINES: SURVIVING AND THRIVING DURING THE DEPRESSION OF THE THIRTIES!
Homestake Mines was one example of thriving during the hard times of the depression in the 1930’s. This stock went from $85/sh in 1929 to $495/sh at the end of 1935. This in and of itself is a terrific return but the fact remains it also paid cash dividends to its shareholders over this time-frame of $128/sh with $56/sh being paid in 1935 alone.
Anyone with a percentage of their net worth in Homestake Mines understood exactly why investments of this nature are a must in times of deep financial uncertainty. The irony of this statement lies in the fact that the leverage of the 1920’s and 1930’s would qualify as a cash transaction in relation to the gargantuan derivatives markets of today!
Not only were investor returns unbelievable but imagine the buying power these funds had in 1935 after the depression and deflation took its toll on everything else.
The performance of Homestake Mines in the 1930’s proves it does not matter whether we are looking at inflation or deflation going forward. This sector should easily flourish under both scenarios not only giving investors a very viable option to protect their assets but quite possibly a vehicle to change their standard of living if at all possible under the economic conditions we may have going forward.
THE PERFECT HEDGE FOR PORTFOLIO DIVERSIFICATION!
I also believe that stocks like Homestake offer an ideal hedge for investors who may not share my engrained belief in the future of gold but recognize the need to be exposed to the sector in their portfolios.
The same reason we pay premiums for homeowner, health and life insurance policies would be the motivation and logic for these people to diversify and own shares in the precious metal sector. Nobody enjoys paying insurance premiums but the financial loss associated with having no insurance is a loss that is simply not acceptable. The difference lies in the fact that Homestake turned out to be an investment which returned huge profits that would fund a lifetime of traditional insurance premium expense.
Shareholders of Homestake fared very well through the Depression as their investment exploded in value paying handsome dividends all along the way. These dividends allowed shareholders an excellent income at a time when cash flow and jobs were non-existent.
Great wealth was accumulated by those armed with the knowledge and foresight to be on board as Homestake proved to be a perfect hedge as the Government confiscated gold and devalued the Dollar. Seems to me we have a scenario beginning to take shape that could easily rival the Depression if not take it to a whole new level of ugly.
I believe the next leg in the precious metals equities sector will give similar if not greater returns than those achieved back then. As promised, I am about to introduce you to a company I feel may establish itself as “A” if not “The” “Leader of the Pack” in the next bull leg forward.
TIME TO GET REAL POSITIVE!
What if you happened to be a junior mining company where the inherent risks associated with the “typical junior” was not present?
What if you had $9,000,000 in cash and another asset that could be sold raising additional millions where proceeds can be used to significantly fund the total estimated cap-ex requirements of roughly $30,000,000 on a project currently awaiting production permits?
What if cash flow from this future production could be used to fund the exploration and drilling requirements of a separate project, with elephant potential, which I have optimistically nicknamed “The Envy of the Pacific Rim” with no dilution to shareholders?
And what if this exists in a company currently with 63,000,000 shares outstanding fully diluted at a current price of $.35/sh with a $22,000,000 market cap?
Oh, and by the way we must not overlook the fact that, in the past decade, the man behind this company has developed or played a part in the development of seven mines in seven companies of which two companies were sold returning $1 Billion and $1.5 Billion respectively to shareholders.
Incidentally, the main man just happens to believe that the current company is easily the best he has ever had!
This little blurb is simply scratching the surface of the secrets that lay within this unknown and overlooked Junior Mining Company standing on the threshold of receiving their production permits.
LION ONE METALS (LIO-CAN, LOMLF-US) IS READY TO ROAR!
I have followed LIO since it came public in early 2011 with a $1/sh Private Placement raising in excess of $10,000,000. Currently the main focus of LIO is an epithermal mining project called Tuvatu located on the Island of Viti Levu in Fiji.
Extensive work was performed on this project in the 1990’s by a company called Emperor Gold. Emperor hired Bateman Kinhill which completed a positive feasibility study in 1997 which showed Tuvatu to be economic with gold at $300/oz.
Extensive work was performed on the property where 80,000 meters of drilling was completed. Of the 80,000 meters 60,000 is stored on-site. Of the total drilled less than 5% of the core was ever assayed.
The drilling consisted of;

195 holes reverse circulation drilling (12,207m)
263 holes surface diamond drilling (54,501m)
112 underground diamond drilling (13,408m)
Of the total drilling only two deep holes were drilled, the separate potential “Elephant” project, which multiple zones were encountered in both holes. One zone showed 284 grams gold/ton over 3.72 meters.
I am very excited about the prospects of deep drilling on this site particularly when this drilling is expected to be funded by cash flow from the epithermal production which lies above. I just love the idea of being able to drill this potential Elephant with no dilution to shareholders! This is one of two distinct advantages that LIO shareholders enjoy over practically all other junior mining companies. The second advantage I will discuss below.
In 2011-2012 extensive work was performed on the un-assayed core as well as surface work which included mapping and trenching across the property. Success in both areas, drill core examination and trenching, gave management the confidence to pick up where Emperor left off. Emperor spent $23,000,000, in 2000 Dollars, in an attempt to bring Tuvatu into production. You must remember back in 2000 gold prices struggled to be at $300/oz which created an over-all lack of interest in the project to finance additional funding to bring production online. Very similar to the circumstances we have now in dealing with the challenges of the typical junior today!
The fruits of Emperor’s labor awaits the shareholders of LIO as there exists 1,600 meters of underground workings in place in which LIO will not have to shoulder the burden of time and expense to build. Hi-grade surface outcroppings, which were discovered in several areas as a result of the mapping and trenching programs, also offer huge benefits as this can be easily mined offering a multitude of options to management including low cost production and quick cash flow.
The failure of Emperor Gold to bring about production at Tuvatu is a classic example of the point I am trying to make when one considers the huge obstacles faced by the “typical junior” today. A lack of funding and overall market conditions will simply not allow many of these juniors to exist going forward. Those who eventually wind up with the projects and properties of merit with the financing to finish the work started by those who failed before them are opportunities I believe offer investors potential far beyond any alternative investment today.
THE SECOND ADVANTAGE!
The second advantage shareholders of LIO enjoy is the experience, success and wealth of the main man behind the company.
Walter Berukoff is the CEO and Founding Father of LIO. His successes with Miramar which was sold to Newmont Mining in 2008 for $1.53 Billion, Northern Orion which was sold for $1.09 Billion in 2007 pretty much speaks for itself.
Currently there are 63,000,000 sh outstanding fully diluted trading for $.35/sh. Wally personally owns in excess of 33% of outstanding shares fully diluted and he was very happy to add to his position recently when the stock traded on its low of $.25/sh. with no other bids in sight.
With an estimated $30,000,000 cap ex to achieve production there will be a need to raise some additional funds. I do not yet know what the financing package will look like when complete as Wally has many options available to him. I do know there are many wolves at the door right now all looking for a piece of the pie as they hope to receive the opportunity to finance Tuvatu as they are fully aware of its value and potential.
Unfortunately many of these potential investors fail to recognize the past financial success enjoyed by Wally has enabled him the luxury of being able to personally fund any difference in cap-ex requirements if he were to so choose.
With cash on hand of $9,000,000 plus other options to raise additional millions Wally and LIO are not plagued with the curse of the typical junior mining company. This is the second distinct advantage that shareholders of LIO have over the typical junior mining company.
I have left out information and management estimates on specifics such as annual gold production and all-in costs per ounce for my next article as I will write this up after what I consider to be a very important meeting with Wally in Lincoln Ne on June 7-8. I am honored that Wally is choosing to take time out of his busy schedule and come to Lincoln.
I know I have barely scratched the surface of the potential for LIO giving no mention at all to any of the other projects in the company which are considerable. After my visit with Wally I plan on writing a comprehensive report on LIO bringing everyone completely up to date. Needless to say, I believe shareholders will have a lot to cheer about as they find out in detail the accomplishments of the last three years and the direction going forward.
No doubt one of the subjects to be discussed in detail when Wally comes to town will be what he would like to see for a financing package. The opportunity may exist for some of you to participate in the financing. Anyone who would like an opportunity to do so should contact me.
As many of you can surmise from my article; I am very excited about what I see and I am anxiously looking forward to writing a comprehensive update sharing the knowledge I gain with all of you.
Needless to say there is a lot more to this story than I have revealed here in this article, anyone with any questions can always reach me through e-mail or and I prefer a phone call at the number listed below.
I view LIO as an opportunity about to leave the station. There is plenty I would like to say about my opinion of the dirt cheap $.35/sh price; but won’t. What I will say is “don’t get used to the stock trading at these levels because I believe that will soon change!” If for some unknown reason the price were to hang around these levels or even show weakness from here I would have a big smile on my face as I know this will give everyone a chance to build a position at prices they will love to brag about down the road.
As always, everything in this article is my own personal opinion and in the end it is up to each of you to do your own homework as your opinion may vary from mine. I have not been compensated for writing this article but I believe that could change going forward as I would like nothing better than telling the world why all investors need to own a piece of LIO in their portfolios.
402-483-4484 8:00 AM - 8:00 PM CST
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Mike,