There are a bunch of these still floating around. Potential problem gold and silver stocks. About 20 on my list of ones to avoid. Have a look at Rubicon Minerals and you will see what I talking about. RMX.TO now trading at 4c compared to $1.50 12 months ago.
Another potential wealth destroyer, is Continental Gold (CNL.TO). On the surface of it, and looking at its website and presentations, and also analyst reviews it looks fine. never trust an analyst as they have a vested interest and are therefore conflicted.
Continental main project, Buritica, PEA is based on measured and indicated resources, and not actual gold reserves, and will take more exploration work to “prove up” to reserves. There’s no guarantee that the company’s 4.5 million ounces of inferred gold resources even exist at all. This is what brought down Rubicon late last year, where their investment decision to build the mine was purely based on a PEA and inferred resource, not a bankable feasibility study, using proven and probable reserves. When they got into the mine, the resource was not there essentially.
And, of course, there’s significant financing risk with Continental, as it’ll take $390 million to get Buritica to production; as a gold developer, Continental has no cash flow from operations, and as of late 2015, had $33.2 million in cash, compared to $43 million in the previous quarter; the company burned through $17.96 million over the first nine months of 2015. There’s no guarantee it will be able to raise such a large capex spend, and will likely result in significant shareholder dilution.
Another negative: the company’s President and CEO is Ari Sussman, who is the former CEO of the train-wreck known as Colossus Minerals, which burned through its cash, went bankrupt and nearly took down streaming partner Sandstorm Gold with it in the process. Management’s track record is very important.
Bottom line: There are a bunch of potential duds around. Make sure you don’t buy one