Arrests in El Salvador

Here's a story worth following in the next few days. On June 30th, eight people in El Salvador were arrested in connection with the widely documented murders suffered by the local anti-mining lobby opposed to the Pacific Rim (PMU) (PMU.to) gold project. As the 'Voices From El Salvador' blog puts it:

"In discussing the issue, the police stated that this is a very complex and complicated issue. In our investigations into the violence we have found the same. The relationships between the victims, the perpetrators, Pacific Rim, the local mayors and diputados, and organized crime are very complex and require a very thorough investigation. We hope that these arrests are the beginning, and that the Salvadoran and international community continue their work to ensure justice in each case". Continues here

It will be more than interesting to find out whether or not the eight arrested this week have any direct connection with Pacific Rim and whether their statements implicate (or not) the company in the assassinations. Watch this space.

h/t tim

Evolving Gold (EVG.v): Keeping the Wolfus from the door

Some very strange stuff going on around the heavily pumped (by none other than arch-bullshitter and market shiller Peter Grandich, surprise surprise) gold explorer, Evolving Gold (EVG.v).

All in one day we've had the company filing its quarterly reports, issuing results from the latest round of drilling (that has good grades and might impress...right up til you see how deep the intersects were found) and then getting a lawsuit slapped on its ass by one of its own directors!

Hi Danny!

Here's the funstuff from that NR:

VANCOUVER, Feb. 25 /CNW/ - Evolving Gold Corp. (TSXV: EVG) (FSE: EV7) (the "Company") reports today that Daniel E. Wolfus, a director of the Company, has commenced a lawsuit against the Company, in the state of California claiming fees of approximately $300,000 allegedly owed to him in respect of the Company's recently completed private placement.

It is the Company's position that Mr. Wolfus in his capacity as a director of the Company is not entitled to remuneration as a "finder" or broker in respect of any private placement of securities. The Company intends to defend the claim vigorously. The directors and management of the Company believe that the claim being made by Mr. Wolfus is groundless as no agreement or understanding existed to pay Mr. Wolfus a success or finder's fee, and to do so would require the Company to contravene the TSX Venture Exchange policies.

The Company has not yet filed any defense in respect of the action and is considering with legal counsel its options in respect of jurisdiction and defenses. The directors have requested that he resign his position as a director, due to the obvious conflict of interest represented by Mr. Wolfus' lawsuit against the Company.

Now perhaps I'm jumping to conclusions, but would this Daniel E. Wolfus be in any way related to the Daniel Edward Wolfus who's been bailing his stock hand over fist recently at prices way higher than today's 77c (when trading was halted this AM)?

Evolving Gold Corp. (EVG)						As of February 24th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Feb 23/10	Feb 23/10	Wolfus, Daniel Edward	Direct Ownership	Common Shares	10 - Disposition in the public market	-293,000	$0.918
Feb 23/10	Feb 23/10	Wolfus, Daniel Edward	Direct Ownership	Common Shares	10 - Disposition in the public market	-2,000	$0.910
Feb 23/10	Feb 22/10	Wolfus, Daniel Edward	Direct Ownership	Common Shares	10 - Disposition in the public market	-55,000	$0.930
Feb 23/10	Feb 22/10	Wolfus, Daniel Edward	Direct Ownership	Common Shares	51 - Exercise of options	350,000	$0.440
Feb 23/10	May 28/09	Wolfus, Daniel Edward	Direct Ownership	Common Shares	00 - Opening Balance-Initial SEDI Report

Funny how these things kinda happen at the same time, innit? Looks like another Grandich sheep-shearing exercise went on here. I hope Cal's paying you well, Peter.

UPDATE: This is how the cute bullshit spilled from the Grandich less than a fortnight ago:

Evolving Gold (EVG-TSX-V $.91 ) – Outside of a significant drop in metals prices and some unknown calamity that occurs on its project in Wyoming, I don’t see much downside risk in the current share price.

Here we are, two weeks later, 15% lower, heavy inside selling and the caca hitting the ventilador in the boardroom. What say you, oh wise owl?
Yes indeed retailers, you've been Grandiched again. Break out the KY Jelly

Affinity (79F.f) and Constitution (CMIN.ob): Catching up on the Peruvian alluvial gold scams

First up is the Peruvian alluvial gold stupidity known as Affinity Gold (AFYG.ob) (79F.f) and ever since this post that noted the stock was trading at 24X asset value, things just haven't been the same for the scamsters.

So far it's 57.7% down and there's still an awful lot of dropping left to do, folks. Cue owl:

Now let's drop in on Constitution Mining (CMIN.ob), the other joke gold miner currently trying to pretend it's worth multiples more than its asset value by pumping an alluvial gold project that has all the same hallmarks as Affinity. The chart has also been looking weak....

.....but the real fun here are the latest regulatory filings. Here we see how the main insider is milking the company for all its worth by contracting out the social relations side of the scam to his own company for the cool sum of U$10,000 per month (and a whole bunch of expenses on top of that fee). Here below is part of the filing and the company referred to is 'The Stocker Group', run by a certain Michael Stocker. Amazingly, this deal was struck just before the latest 'management realignment' that made the new President and CEO for CMIN.ob.....yeah you guessed it already....Michael Stocker! :

The “Company” shall receive a fee based on work load for its services rendered during 1 (one) year (Oct. 2009 to Oct. 2010). The following fees will apply and be invoiced monthly.

(a) Hourly time charge: For meetings, telephone conferences/calls, etc. of less than half a day fee is USD 200/hour.

(b) Daily time charge international consultants: For periods equal in duration to, or exceeding, half a day fee is USD 1300/day. Between 0.5 and 1.0 day the charge is pro-rata. Local consultants in Peru will be charged at a day/fee of USD 600/day. The compensation rate has a cap of $1300 payable in any business day.

(c) Travel time is charged at the same daily rate.

(d) Consulting services provided by Dr. MICHAEL JOHANN STOCKER pursuant to this agreement will be limited to USD 10,000/month.

(e) Reasonable, proven expenses (travel, accommodation, meals, major ‘phone charges, etc.) are charged at cost with no mark up. Receipts are provided for all charges.

(f) Flights, and combinations of flights, of 3 hours or more in duration are in business class.

(g) The company may terminate the contract with 3 month’s written notice.

This milking isn't something new, though. As the filings show, in 2009 Stocker managed to cream off $90,000 directly for himself and another a cool $257,130 went to his other company, 'Stocker International Inc', all for the line items known as 'consulting services' (my, those overheads, eh?). All this from a company with a 7X ratio of market cap to NAV and on a current 18 month exploration program that according to the same filings needs even more money thrown at it else be curtailed.

Yes indeed, PT Barnum is alive and well and living in Santiago, Chile.

Happy New Year! from Constitution Mining (CMIN.ob)

Hot on the heels of the post on that other Peruvian alluvial gold scam Affinity Mining (79F.f) yesterday (which is down another 25% today, btw) let's check in on the smoke'n'mirrors special we all love to giggle at, Constitution Mining (CMIN.ob), and see how it's been getting on in 2010:

What? over 30% down since December 31st? Let's check in with our friend the owl and get his thoughts on the share price evolution of CMIN.ob these last few days:

Disclosure: No position in either stock. Not long, not short, not nothing. Do what this humble corner of cyberspace does and simply avoid these scam-ridden stocks like the plague. The only people ever to get rich off these crudballs are the insiders. Period. And just in case you think I haven't checked on CMON.ob and I'm just making shit up, have a look at this previous post, my Swiss visiting readers. There's a whole buncha stuff here, too. Enjoy!

So how's that Affinity Gold (79F.f) scam going since you mentioned it on IKN, Otto?

Ohhhh, it's seen better days...

On December 16th 2009 this humble corner of cyberspace noted one of the many OTC gold scams that float like flotsam and jetsam on the market tide, a total scam job named Affinity Gold that trades in Frankfurt under the ticker (79F.f), as well as under the (AFYG.ob) ticker in the US OTC market.

Here's a one month chart to show just how it's been getting on since then:

Waddya say, owl?

Is B2Gold (BTO.to) moving into Panama?

On the last day of 2009, a company called Pershimco (PRO.v) published this PR that announced to the world it had a letter of intent to buy 85% of the Minera Cerro Quema (MCQ) gold mining company in Panama. This MCQ owns the same-named Cerro Quema mine that has 451,000 oz Au as a measured and indicated resource and the economics look pretty robust, too (you mineheads can check out the presentation at the BHV.v site). According to the literature and my Casio, cash cost per ounce would be in the $300 to $350 range so even if that's optimistic we're still looking at a small mine that, at today's gold prices, will be coining it in if it runs the 50,000 oz per annum output expected of it.

So what's this got to do with B2Gold (BTO.to)? Well, at the moment MCQ is owned by a company called Bellhaven (BHV.v), an explorer with plenty of assets in Panama but not much in the way of cash. What BHV wants to do is sell 85% of MCQ to PRO and then freeride its way on the other 15%, which would be around 7,500/oz gold per year. But Bellhaven's problem is that it bought MCQ from Central Sun (now owned by BTO.to) on a "little bit up front and bigger bit paid later" deal, as outlined in its annual report (Aug '09)

17. SUBSEQUENT EVENT
Subsequent to April 30, 2009, the Company acquired a 60% interest in the Cerro Quema property through the acquisition of the shares of Minera Cerro Quema S.A. purchased from B2 Gold. As a result, the Company now holds a 100-per-cent interest in Cerro Quema through the ownership of all of the shares of Minera Cerro Quema S.A. As consideration for the 60-per-cent interest in Cerro Quema, the Company paid US$200,000 and issued a non-interest bearing promissory note with a principal amount of US$1,950,000 (CAD$2,360,475) due December 1, 2009, such note being collateralized by a pledge of the shares of Minera Cerro Quema S.A. purchased from B2 Gold. At the option of B2 Gold, the note can otherwise be satisfied by the payment of US$950,000 (CAD$1,149,975) and the assignment to B2 Gold of a 5-per-cent carried interest in the Cerro Quema property. The payments detailed herein are in addition to the US$4-million previously paid by the Company pursuant to the original purchase agreement to acquire the 60-per-cent interest in Cerro Quema.

What all that little lot means is that if BHV doesn't pay the balance to BTO.to on time, it will lose the 60% share of the mine it bought from them originally. And the real problem for BHV is that the promissory note is due paid January 31st 2010...this month.

So, it looks like BHV has been shopping around, trying to find a company that can stump up the cash needed to bail them out, get their $1.2m out in cash and keep the asset on their books...well, 15% is better than nothing, right? In fact, BHV has already tried to do this with another company, Yukon Star (YK.to) as explained in the recent MDA:

Under the MOU, Yukon Gold had a 60 day due diligence period, during which it was to make incremental non-refundable payments to the Company totaling US$400,000 (US$75,000 received), which monies were to be applied to the purchase price provided that closing of the transaction occurred on or before November 12, 2009.
However, subsequent to October 31, 2009 and subsequent to the 60-day due diligence period, the MOU was terminated by the Company.During the current period, the Company continued the care and maintenance of the Cerro Quema Gold Project,completed an extension of the Share Purchase Agreement with B2Gold and is currently seeking to secure adequatefunding in order to exercise the Share Purchase Options and advance the project to production.

And by the way, there's a whole lot of other guff on page 2 of the Bellhaven MDA, if anyone out there wants to follow up and do their own DD. So anyway, BHV and PRO have signed a letter of intent (one of those famously shaky documents) and now PRO.v is charged with raising $18.5m to get the deal done. But once you look at the company structure of PRO, you have to wonder whather they'll be able to raise that kind of moolah in just six weeks (or maybe they only have 4, what with that note being due soon). According to its latest filings, PRO.v has total assets of 9.5m , just $90k cash in the bank and the working cap evolution looks pretty sad (just one chart of many I could pin up here):
It seems to this humble corner of cyberspace that BHV is trying to throw a Hail Mary Pass with this deal, because if it doesn't come off B2Gold gets their 60% share of the mine back. at no charge. And what with Panama's new government suddenly becoming rather mining friendly, (we went into that angle on another story in IKN36, published this weekend) BTO may just fancy a crack at a small but solid looking project in their specialty region. I mean, this is the same BTO that totally outplayed Linear Gold (LRR.to) for the purchase of Central Sun and the same BTO that has a really sharp mining laywer on the BoD. Once BTO gets its 60%, it would have to stump up $2.2m or so to buy out the 40% partner (a private Panama finance company that would surely do the deal...they're not miners and would likely want $$$, not a property asset) and then maybe $15m to get the mine started. Nothing too difficult for a company the size and experience of BTO.

So to cut a long story short (I've already done this as quickly as possible, and there's another 10,000 words to write to get the details down...but if you care enough you'll find out for yourself) from this point there seems to be three possible courses that the MCQ story might take:

1) PRO.v does actually raise the cash and gets its mine.
2) PRO.v doesn't raise the cash but BTO gives BHV another prolongation on the deal (it recently gave BHV an extra month...just one extra month).
3) BTO calls in the note, BHV can't pay and loses its 60% of MCQ. The scenario above kicks into play.

Right now, I'd bet five bucks on the three horse. DYODD, dude.

My thanks to reader and IM pal 'BF', who acted as sounding board and came up with some smart suggestions on this one.

Identifying a gold stock scam

So yet again the idiots pumpers at Constitution Mining (CMIN.ob) (who seem to be largely based in Switzerland, for some reason or another) have been sending in their considered opinions via mail. They're missing a point here; it doesn't matter whether a scam stock's price goes up or down, it's still a scam! In fact the whole point of running these scumball activities is to make the price go up and attract in the sheep....only the most amateur of scams are based around stocks that sell at $0.001 for long periods.

So how do you spot a scam? Easy, you do something that the vast majority of idiot sheep never do in their investment lives (and then wonder why they're still poor 30 years later): YOU READ THE REGULATORY FILINGS!

By way of another example (because there are far more scams out there than just CMIN.ob and I've written more than enough to show just how shaky this bullshit company is already) here's another example, that of an alluvial gold mining junior called "Affinity Gold Corp.". It is listed in the USA under the OTC ticker (AFYGE.ob) but hardly trades. However, it's also listed in Frankfurt under the ticker (79F.f) where, by some miracle, it actually averages a few thousand shares traded per day.

Why is it a miracle? Just look at the latest quarterly:

• Current Assets (i.e. cash): $23,044
• Fixed assets (i.e. a number picked out the sky as a value on a truly worthless land holding): $12.7m
• Current Debt (i.e. what it needs to pay to keep running): $147,683

The company has no cash, no production, not even close to making any money and owes more than it has. Even if you are stupid enough to believe its properties are worth the number printed on its books, the whole caboodle is worth $12.7m or so.

Now here's the rub: The company has 51.2 million shares out and they trade at or around €4 (to be precise it's trading at €4.11 right now). In other words, it has a market cap of around €210m.

Asset value $12.7m and market cap twenty-four times bigger = scam. End of story.

DYODD dudettes and dudes. Stop believing everything you read around one of the most scam-ridden sectors of business. Read the REG Fs, for crying out loud! Mark Twain nailed it over a hundred and fifty years ago and nothing much has changed since then, so if you just nod your head and believe everything the gold scammers tell you without checking for facts you deserve to lose your money to these criminals.