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Is Big Bear Mining Selling Fool's Gold?
Christopher Steiner, 04.22.10, 12:20 PM EDT
Tiny precious metals firm's stock jumps under bankrupt CEO.
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http://www.forbes.com/2010/04/22/pump-and-dump-personal-finance-gold-mining.html?partner=yahootix

It's been an extraordinary week for Big Bear Mining, a gold prospecting outfit based in Scottsdale, Ariz. Despite having zero revenue during its five years in existence, and no immediate likelihood of generating any, the company's market value reached an astounding $230 million on Wednesday.

This is especially notable, given that there's no record of Big Bear's ( BGBR - news - people ) shares ever trading publicly prior to March 12, when 20,000 shares changed hands. After starting this week at around $1 per share, Big Bear's stock jumped as high as $1.68 on Wednesday, when 17 million shares changed hands at one cent a share.

Running Big Bear is Steve Rix, who joined last month and is now its chief executive, chief financial officer, president, treasurer and secretary. Rix is also Big Bear's sole employee, as well as its one-man nominating, corporate governance, audit and compensation committees. What does Rix think is behind Big Bear's sudden popularity?

"We're finally doing things now," he says, conceding that "there's some irrational exuberance out there."
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By "doing things," Rix is referring to new financing and claims purchases. Hype appears to be playing a role as well. The company has put out a flurry of press releases in recent days. One last week announced that Big Bear had acquired for an undisclosed price a mine in Ontario that last operated in 1937. A proclamation this Monday revealed an agreement to buy an additional 96 acres of Ontario claims.

This Tuesday Big Bear reported the addition of "renowned geologist" John Glasscock to its board. Glasscock, who works for Cowboy Exploration in Jelm, Wyo., did not return a call seeking comment.
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Rix's own background is a bit better known. He declared personal bankruptcy last year under Chapter 7 of the bankruptcy code because of what he calls "business deals gone bad." Before that, Rix says he spent 25 years "making a living going into new industries and revolutionizing how they approach marketing, investor relations and raising capital."

Rix was hired at Big Bear by his predecessor, Dwayne Skellern, a salesman at Prudential Financial ( PRU - news - people ) until 2009, according to SEC documents. As to why Skellern left Big Bear, Rix says "Who knows?"

Some supporters of the stock are clearly not bothered by any of this. They include Michael Cohen and Jason Kelly. The duo works for Global Marketing Corp. in Seattle. Cohen's investing muse is a website called doublingstocks.com and Kelly's is daytradingrobot.com. Kelly and Cohen for months have been beating their drums about a "big pick" to come. Kelly disclosed it to be Big Bear on April 19, and Cohen did so Thursday morning (Apr. 22).

In Cohen and Kelly's view Big Bear's stock is poised to triple from its recent range. What's their connection to Rix? None, says the Big Bear CEO, who claims to know neither Cohen nor Kelly.

Rix also can't explain a Jan. 20 deal in which Big Bear sold 250,000 shares for 20 cents each--the very day before it carried out a 50-for-1 split. The 250,000 shares Big Bear sold in January for $50,000 were worth more than $20 million on Wednesday. Nothing like a 400-fold return in less than three months. Berkshire Hathaway's ( BRK - news - people ) Warren Buffett would be proud of such returns.

"That was before I got here," Rix says of the sale and split. "I put some e-mails out on that, but I haven't gotten it figured out yet."

Another thing that's hard to figure is Rix's claim that he has no ownership in Big Bear. His stake, he says, is still being negotiated with his predecessor Dwayne Skellern--the same guy whose departure Rix can't explain.

Rix does say he's landed promises of $1.4 million in working capital from outside investors. That's big money to an outfit like Big Bear, which has incurred only $56,268 in expenses during its five years in existence and had $1,317 in the bank at the end of 2009.

To hear Rix and Big Bear's stock-picking backers tell it, about the only thing standing between investors in the company and vast riches is the weather.

"Rain and snow may make the road leading to our property impassable," Big Bear stated in a Securities & Exchange Commission filing. "This will delay our proposed exploration operations and could prevent us from working."

For now, the market's putting a $230 million value on Rix's one-man show. That compares to a market value of $6.4 million for each of mighty Apple's Computer ( AAPL - news - people ) 34,300 employees.
If that makes sense for you, go ahead and invest in what has all the signs of fool's gold.