Taking a Run at Gold Canyon
Jan 9, 2015
In the six weeks since the start of December 2014, Gold Canyon Resources has traded 50 million shares in a company with only 147 million shares outstanding. While insiders holding more than 10% of the shares are supposed to report their trades within three days by the rules of the exchange, the rules are mostly ignored. We know that Pinetree Capital (PNP-T) and Sheldon Inwentash owned about 20 million shares. He reported selling some shares in early January. I personally think he’s sold them all but that’s just an opinion.
I also happen to know that Sprott owned about 17-18 million shares. For some reason they don’t report their insider transactions but that’s not unknown.
I did some research and found that since December 1st, 2014 to now, of the 50 million shares sold, Anonymous represented just under 68% of the sales but only 10% of the buying volume. TD Sec did only 13% of the sales but 31% of the purchases.
I think both Sprott and Pinetree were selling under Anonymous to keep their actions under the radarscope of investors. Perhaps investors are missing the 1800-pound gorilla sitting on the sofa. GCU began the month selling for $.21 and with over 1/3 of the total float being dumped on the market; the price only dropped 55% at the worst when GCU hit $.09 on December 19th.
The big question isn’t who sold; we have a pretty good idea of that from knowing who owned big blocks. The important issue is just who managed to absorb tens of millions of shares in an illiquid market? And a hint comes from the big buyer of over 31% of the total shares traded, TD Sec.
Someone is taking a run at Gold Canyon. I have no idea
if they will report the insider sales when they go over 10% or not but someone bought over 15 million shares through TD Sec.
To get an idea of what Gold Canyon would be worth in a buyout, we know that the market is valuing gold in the ground at $12 to $15 an ounce. If you go to the 43-101 released in November of 2012, GCU used a figure of $1400 for gold and $15 for silver. The numbers were based on an 80% recovery for gold and 60% for silver. The open pit resources were just over 5 million ounces of gold and 25 million ounces of silver. Therefore, in a buyout, management would be remiss if they accepted below $60 million. $75-$80 million would be a more reasonable offer.
At $.10 a share, you are paying $3 an ounce for gold and you get 25 million ounces of silver for free. I don’t expect that to last for long. One day soon the wholesale dumping will cease. The buying will not.
Even the majors have begun to realize gold still has a future and are starting to nibble at projects in safe jurisdictions. Gold Canyon is low grade at just about 1 g/t gold but in the safest jurisdiction in the world. That’s worth something. If a bidding war starts on this nice size deposit, the price could go a lot higher.
Shares are still being dumped but more important, they are still being snapped up just as fast.
Gold Canyon is not an advertiser. I have bought shares in the open market. I’m not daft. Do your own due diligence.
Gold Canyon Resources
GCU-V $.105 (Jan 08, 2015)
GDCRF-OTCBB 70.6 million shares
Gold Canyon website