We are getting ever so close to the final precious metals launch into the stratosphere. In fact, we believe that yesterday's $20 rise in the price of Gold will prove to be the "foreshock" to the earthquake ready to rattle investors. With that in mind, we're continuing our series on promising junior mining companies.
Today's featured company is a very speculative play called Samex Mining (SMXMF-OTCBB or SXG.V). This company was first brought to my attention, as was ECU Silver Mining, (http://markostake.blogspot.com/2010/02/ecu-silver-mining-as-good-as-it-gets_7745.html) by Bill Murphy's must-read LeMetropole (http://www.lemetropolecafe.com/).
But if you're not a reader of LeMetropole, which you should be, you may not know about this incredibly promising company.
Samex is an explorer, which is different than a miner in that explorers chiefly find promising deposits. How they dispose of those finds can vary. Some like Vista Gold Corp. (VGZ) have spun-off projects to shareholders. Vista spun-off a company called Allied-Nevada Gold Corp. (ANV), which is a first-class producer in, where else, Nevada!
Samex explores the Andean Cordillera of Chile for rich deposits of gold, silver and copper. This area is one of the most bountifully mineralized regions on Earth, where many of the globe's largest deposits have been discovered.
Normally, I tend to avoid companies that operate in areas that may be considered geo-politically risky. Just ask the shareholders of Crystallex (KRY), who had their fabulous Venezuelan deposits expropriated by Hugo Chavez. KRY sold for more than $5 per share in 2007, now languishing at about $.30 and is engaged in a war of words with the Venezuelan Government. It would a shareholder want to "kry"!
Chile is no Venezuela and is known for mining friendliness. Since the 1990’s, Chile has been the first port of call in terms of investing in South America and, as a result, numerous foreign companies have developed the country’s burgeoning mining sector. Chile is recognized as the mining capital of Latin America and can be credited with initiating the investment surge to make Latin America the world’s primary mineral target.
As an explorer, earnings as a barometer of value are entirely irrelevant. The value is highly qualitative - more a function of the quality of managment, properties owned and the company's ability to maintain funding as it completes its program.
Samex has been steadily reporting rich finds. The company's latest press release elaborates (http://www.samex.com/news/aa-news-2010/NR1-10-Jan21.pdf).
While Samex is not particularly well capitalized, it was able to realize proceeds of nearly $1.2 million in a warrant offering in November, 2009. Thus, the company, despite its very low stock price of about $.30 is still able to access capital markets.
Anyone considering investing in Samex has got to look at it as a high risk/potential high return proposition. This company is not for the feint of heart - as is ANY explorer.
For disclosure purposes, I am an owner of Samex shares and believe that the high potential rewards MORE than justify the risk. I would NOT recommend it to anyone... just those who are looking for an excellent roll of the dice and perhaps some diversification in a portfolio of juniors. I would NOT place Samex as a core holding as I might view either Seabridge Gold (http://markostake.blogspot.com/2010/03/seabridge-gold-how-to-buy-gold-for.html) or Hecla Mining (http://markostake.blogspot.com/2010/03/hecla-mining-at-119-years-old-producing.html).
Finally, I want to thank our new partners at "Stock Maverick" (http://www.stockmavrick.com/), a fabulous website for penny stocks like Samex, although with a broader mandate to cover promising companies in sectors not just limited to commodities and natural resources, as we are at "Marko's Take". Check it out for some excellent ideas!
For new readers, we also have a YouTube channel, which is more oriented toward World Events and Politics, as opposed to pure investment issues. It can be accessed here: http://www.youtube.com/markostaketv. We will be filming 5 new segments this coming Saturday and start releasing them on a weekly basis, along with our partner, Phoenix Film Group, http://www.youtube.com/phoenixfilmgroup.