Gold. Energy & Tech Stocks Februa. Gainey Capital Corp. Progress Rating: Phone: (1)

Transcription

1 J Taylor s D o w J o n e s / G o l d A n n u a l R e t u r n s 8 0 % Gold Percentage Gains/(Loss) 6 0 % 4 0 % 2 0 % 0 % D J IA % G o ld % % % Y e a r s Energy & Tech Stocks Februa Weekly Hotline Message (Now in our 33 rd Year) June 13, 2014 New Buy Recommendation Gainey Capital Corp. Business: Exploration, development & production of gold and silver in Mexico. Pres & CEO: David Coburn Traded Toronto: GNC Shares Outstanding: 42.7 million Price 6/13/14: US$0.327 Market Cap: US$13.9 million Working Capital 12/31/13 (1) : C$466,469 Milling Capacity: 300 tons/day Progress Rating: A3 Phone: Website: (1) Prior to raising C$2.7 million on May 22, 2014 through the issuance of 13,617,500 C$0.20 with an equal number of purchase warrants to buy shares at C$0.30 plus shares issued are included in above noted shares outstanding. Gainey Capital s focus is in the prolific Sierra Madre Occidental Trend where a host of world class gold and silver deposits exist some of which are displayed below along with Gainey s flagship property, namely the El Colomo Mine, which has a non-compliant resource of 200,000 ounces of gold. With management focused on organic growth to preserve and increase shareholder value, it isn t only the highly prospective gold and silver exploration property that is important, but also the existence of a 300- tone-per-day gravity & flotation plant that is serviced by the national power grid. A fully-permitted tailing reservoir and a mine site housing camp and industrial facility with all necessary mining

2 2 equipment is in place. In short, the El Colomo property is poised for near term gold production as well as exploration of its 46,000 acre concession. The El Colomo Mineral Concession which was formerly exploration ground held by Asarco, was acquired in September 2013 from Golden Anvil, a private U.S. company in exchange for 12 million common shares and 1 special warrant convertible into a maximum of 3 million shares depending on a gold-equivalent NI mineral reserve to be delivered no later than October The property covers an area of 18,766 hectares or 46,000 acres in the western portion of the Sierra Madre Occidental mountain range. The property has the potential for high grade gold and silver mineralization exemplified by the La Nueva Victoria Vein, which has a historical drilled inferred resource of nearly 500,000 tonnes averaging 6.7 g/t gold and 353 g/t silver (95,000 oz. gold and 5 million oz. silver) or a g/t gold equivalent. The cross section of the La Nueva Victoria vein shown on your left suggests that an increase and

3 upgrade of the historical resource is highly likely. 3 In addition to the potential for high grade vein mining, the property holds the prospects for bulk tonnage mineralization illustrated by the La Higuerita Zone, which has a historical geologic resource of 20 million tonnes grading 1.27 g/t gold equivalent (881,000 oz. gold equivalent). And management believes there is a strong likelihood that the La Higuerita zone and La Nueeva Victoria veins connect and also that the Las Minitas veins to the south of the La Nueva Victoria connect over a strike length of at least 2 kilometers. The property as a whole is located on a geological dome known as the El Colomo Dome. It has geological similarities with domes in nearby multi-million oz. mineral districts in the state of Durango, such as Bacis, Tayolita- San Dimas and Pueblo Nuevo. With only about 3% of the entire 46,000 acre property explored using modern technology and with 21 mineralized zones identified to date, it is obvious that this company has considerable upside potential. Impending Milling Cash Flow Stories of mining companies with highly prospective concessions are not rare. What is much rarer is a company with the ability to explore those claims without diluting early shareholders into oblivion. On January 22, 2014, management announced it has signed an agreement to process ore at its El Colomo plant on behalf of Mining Minerals of Mexico Corp. In that January announcement, management stated that some 18,000 tonnes of Mining Minerals ore had been stockpiled and that Mining Minerals would pay Gainey on a per tonne basis. The end product is a gold-silver concentrate. Last week, I had lunch with the company s CEO, David Coburn, here in Middle Village Queens, at which time he advised me that the company has received a prepayment from Mining Minerals of Mexico for the processing of the ore which is being hauled 22 kilometers from that company s Gallo d Oro property with mineral rights covering some 2,450 hectares under option. In my discussion with Coburn, I got the impression that an announcement of production as well as the potential to expand the mill from 300 to 600 tonnes per day may be forthcoming sooner rather than later. By the way, there is a YouTube video that shows the milling operation at the El Colomo property here: Of great importance of course is not only the milling equipment, but having it in the hands of someone who knows how to use it. In that regard, Coburn pulled a coup when he was able to win the services of George Cantua, who left his position at Barrick Gold s world class Pueblo Viejo mine in the Dominican Republic. Interestingly, Coburn told me that long before he was aware of Dynacor, his vision was to build a mining company with a tolling operation. When I related my successful experience with Dynacor and my very positive view of Dynacor s CEO, Jean Martineau, and why they were successful, I came away with the sense that he understands the importance of building strong relations with the local people through honest and dependable business dealings. Nothing is more important than doing so over the longer term, which is why by the way why other Canadian companies have not been able to equal Dynacor s success. MANAGEMENT David Coburn - CEO & Director - As Founder, CEO and a director of Gainey Capital, for the past four years David Coburn has focused on acquiring gold and silver operations in Mexico. A seasoned entrepreneur, he has spent the majority of his business career in the plastics and chemical industry, developing successful operations with partners such as GE Plastics, GE Capital, Dow Chemical, Dupont Chemical, BASF and Bayer, primarily in building and acquiring companies with operations in Mexico, the USA and China. He and his business interests have held significant investments in the renewable energy/oil & gas and natural resource sectors over the past thirty years. BSc (Business Admin), Northern Arizona University.

4 4 Ms. Michele Pillon - Chief Financial Officer and Corporate Secretary- Ms. Pillon has been a director and/or officer of a number of public companies listed on the TSX Venture Exchange and has 25 years' experience in the junior mining exploration sector providing accounting and regulatory assistance to public companies. Brent Omland Director - Mr. Omland is currently the CFO, Americas of Ocean Partners USA, Inc. ( OP ) of Wilton, Connecticut. OP is a global base metal and precious metals concentrate trader with a strong presence in Mexico. OP works with miners to deliver successful trading services, including financing solutions, for their concentrates and by-products. Mr. Omland is an experienced senior finance professional in the mining, metals and physical trading fields having worked previously for Teck Resources Limited and more recently as the VP Finance and Chief Financial Officer of Ivernia Inc. and Enirgi Metal Group Pty Ltd ( EMG ). Ivernia and EMG are companies focused on lead mining and smelting in Australia. Lawrence Segerstrom Director - A professional geologist with more than 30 years of experience in exploration and 20 years in senior management. Past management positions include COO of Paramount Gold and Silver Corp. and Manager of Geology of the Grasberg Mining District for Freeport-McMoRan. Larry has been involved in several discoveries, including leading the teams that discovered and developed new resources of more than 750,000 ounces of gold and 60 million ounces of silver with Paramount, and new ore reserves totaling 3.4 billion pounds of copper and 3.6 million ounces of gold with Freeport. He is currently President of Metallum Exploration Ltd. He holds a M.Sc. in Geology, a M.B.A., and is a qualified person under Canadian NI Marco Rincón-Valdés Director - 17 years of business experience in Mexico & in international trade. Investment & Development Officer, Nayarit State Government, Mexico (1990s); joined Grupo MataGpac in 1998, a private group of companies focused on foreign trade, aquaculture, heavy construction, real estate and precious metals mining. Senior management at Golden Anvil since 2009 appointed CEO in BA (Industrial Eng), Univ. Panamericana / Executive MBA, Cornell University (Johnson School of Mgmt). George Cantua - Operations Manager - 30 years in precious and base metals development and production. Formerly Operations Supervisor at Barrick Gold's Pueblo Viejo facility, from 2010 to 2013, processing 24,000 tons of ore per day. Prior to Barrick, he was General Supervisor at Asarco Ray, operating a 24-hour sag and ball mill and sulfide copper recovery plant. Has been involved in nine plant start-ups during his mining career, with an exceptional safety and environmental record. THE BOTTOM LINE Companies that can generate cash flows from which to fund exploration offer a huge advantage over companies that rely on constant public stock sales to fund exploration. Thanks to one of the most undervalued junior mining markets I can remember since I started writing this newsletter in 1981, Gainey Capital s shares offer a bargain even without its prospects for generating positive cash flows from custom milling. But thanks to this current market weakness I believe this company is one of the best exploration stories out there. I say that of course based on my view that this management has brought together the technical talent required to run a successful milling and mine exploration effort. I also believe that this is a management that has the ability to raise capital as required but one that will do so with its first obligation to early shareholders. I say that on the basis of management turning down an offer to raise $10 million at current prices when it felt confident a $2.7 million financing would be sufficient to commence cash flow from custom milling. Management is also devoted to holding its burn rate to exceptionally low levels compared to its peers. While the company still has to prove it can run its milling operation profitably, given the company s low burn rate, substantial exploration potential and its low market cap, it is a risk I believe is well worth taking in anticipation of a turn for the better in the gold market. J Taylor s Gold, Energy & Tech Stocks (JTGETS), is published monthly as a copyright publication of Taylor Hard Money Advisors, Inc. (THMA), Tel.: (718) Website: THMA provides investment ideas solely on a paid subscription basis. Companies are selected for

5 5 presentation in JTGETS strictly on their merits as perceived by THMA. No fee is charged to the company for inclusion. The currency used in this publication is the U.S. dollar unless otherwise noted. The material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. The information contained herein is based on sources, which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available information. Any opinions expressed are subject to change without notice. The editor, his family and associates and THMA are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the company mentioned above. Under copyright law, and upon their request companies mentioned in JTGETS, from time to time pay THMA a fee of $250 to $500 per page for the right to reprint articles that are otherwise restricted solely for the benefit of paid subscribers to JTGETS. To Subscribe to J Taylor s Gold, Energy & Tech Stocks Visit: Receive J Taylor s Gold, Energy & Tech Stocks monthly newsletter and weekly messages for the period of your choice (U.S. and Canada). For foreign postal delivery contact us at below. Return to: PO Box , Maspeth, NY 11378, USA. Phone or Fax: , questions4rtaylor@gmail.com (Make check payable in US$ to Taylor Hard Money Advisors, Inc.) Please Select Subscription: delivery only (Monthly and Weekly Message): One-year US $ three-months US $69.00 U. S. Mail Delivery of monthly newsletter only (Weekly message by only): One-year US $ three-months US $84.00 Name Address City State/Prov. Zip/Postal Code Telephone Fax Primary Secondary Card Number Signature Check Visa MasterCard Discover Exp. 3-digit Code (Last 3 digits of the number found on the back of your credit card, below your signature)