Why I Bought Silverado Gold Mines (SLGLF) 83 comments
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But to those for whom it merely evokes curiosity, it is sufficient to say that back in 2002, this stock experienced a massive 840% run up in price from $0.09 to $0.76 as investors piled in before even more rapidly crashing back down to earth 4 months later to $0.10. The whole episode is charted below:
Since then, the stock has drifted ever down with the occasional and short-lived adventure upwards.
Readers may remember that the bust was triggered by an article by an analyst who suggested that all was not well in the Silverado camp. Within a day of that article appearing, the stock began the downward phase of its roller coaster ride.
By the time the plummeting was over, recriminations followed as Silverado CEO, Gary Anselmo, expressed disbelief as to why this had happened while a certain gold stock analyst mysteriously disappeared amongst accusations of pumping up the stock.
So much for 2003, but this is now 2006 and though memories may not have faded, I came to this stock as one who was a distant observer of that fleeting price spike. Below is the relative performance chart for Silverado and the HUI since gold stocks resumed their bull market back in May 2005. The daily chart for Silverado is also displayed here.
As a chartist, I have two things to note. The first is that Silverado hit a multi-year low of $0.03 a share in May before progressing to a recent high of just over $0.08. That is a 267% increase and by any measure a top performing stock over the last 8 months.
The second observation is the high correlation between the HUI and Silverado price over this period. Note how the Silverado price roughly tracks the rises and falls in the HUI index as they both advance to greater highs. There appears to be an unmistakeable correlation in price changes.
This leads us to the somewhat surprising conclusion that despite its recent history, Silverado is now a full-blooded participant of the gold stock bull market. Not only that, it has proved to be one of the best performers over that period!
Despite what you may think about this stock, its assets and management, I don’t think you can argue with the price or the correlation, the only question left to answer is "Why?
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READ THE SB2 AND READ THE 10Q. SEE WHAT HE IS DOING TO HIS SHAREHOLDERS. BECOME INFORMED THEN DECIDE WHAT IS BEST FOR YOU.
NOTE: 8 August 2003: While everyone waits to see just what this summer's financial results will be, Garry Anselmo isn't suffering any. He has been seen driving around Vancouver in his brand new Corvette. He continues to spare no expense in providing himself with the kind of lavish lifestyle he wants while displaying a complete disregard for the little investors who have put their hard earned money into this company based upon his lies. When it comes to sinful abundance we are reminded of the pictures and discussions of Saddam Hussein's opulent luxury at the expense of the Iraqi people. Living off the trust of the public as president of a public company is a great way to go, especially if you don't care about the shareholders isn't it Garry?
OUR COMPLAINT
Date Filed March 11, 2003
Filed with SEC, Canadian Securities Administrators
Known action to date - NONE
David Baines
Vancouver Sun
Saturday, February 16, 2008
www.canada.com/vancouv...
The stock market is a mysterious place. There are lots of companies that trade on the junior markets that never make money, but they manage to stay alive and keep trading.
The best example is Silverado Gold Mines Ltd. It was formed in 1963 -- 45 years ago -- and it has never had a profitable year. Since inception, it has lost more than $86 million US.
Yet its chairman, president and founder, 64-year-old Gary Anselmo, lives a very comfortable life. He lives in a $883,000 house in Richmond, he drives a 2006 Corvette, he eats at the finest restaurants and flies first class wherever he goes (he says because of a back injury).
Anselmo boasts, quite truthfully, that he takes no salary from Silverado, but this is not the whole truth. Over the years, he has earned millions of dollars through his private company, Tri-Con Mining Ltd., which acts as the operator for Silverado's two main projects -- the Nolan gold project near Fairbanks, Alaska, and its newer "green" project, a process for making coal water (an environmentally friendly substitute for petroleum-derived fuels).
Tri-Con bills the company at the rate of cost plus 15 per cent for overhead, plus 25 per cent for exploration services or 15 per cent for development and mining services. Over the years, this arrangement has put millions of dollars into Anselmo's pocket.
During the nine months ending August 2007 (the company's last reporting period), Tri-Con billed Silverado a total of $4.26 million. If just 15 per cent represents profit to Anselmo, that amounts to $639,000. Keep in mind, that's for the last nine months only.
Where does all this money come from? Every once in a while, when the treasury gets low, Silverado issues more shares for cash. Over the years, it has done this many times. There are now 778 million shares outstanding. And that's after a three-for-one share consolidation and a 10-for-one consolidation. The net result is that the company has manufactured more paper than a toilet paper factory.
Of course, people will only buy a stock if they feel they can unload it at a higher price. There are two ways to get the stock price higher. The first is for the company to do something productive. In this regard, Silverado has been a flop.
Every project the company has undertaken has ended in failure. In 1985, for example, Anselmo was touting the Mount Grant gold mine in Alaska, claiming it had "the potential for being one of the highest recovery producers in North America."
Commercial production began in November 1985, but a little more than a month later, operations were suspended "after initial operating results did not meet expectations."
The company shifted focus to its Nolan Creek project. In October 1992, Anselmo said projected earnings for the year ending November 1994 would be $8.96 million US. In fact, the company lost $3.1 million U.S.
Anselmo is still flogging the Nolan gold project, but he has also jumped on the "green" bandwagon. In 2000, he announced that Silverado would establish a plant in Alaska to produce coal water.
He claimed Silverado could produce coal water for the equivalent of $7 US per barrel of oil, which would position the company "as a world leader in the commercial development of such fossil fuels, not only in Alaska, but in other areas of the world." (If you're going to be a world leader, it may as well be the whole world.)
In any event, here we are: eight years later, and Silverado not only doesn't have a commercial plant, it doesn't even have a demonstration plant.
During the nine months ending August 2007, the company didn't generate a single cent of revenue, but there are no signs of austerity at Silverado's spacious, glass-sculpted offices on the 18th floor of the Terasen Gas building at 1111 West Georgia.
During the same period, it racked up $5.6 million in expenses, including $967,609 in management services, $891,982 in consulting fees, $722,009 in advertising and promotion, $668,367 in office expenses and $191,584 on reporting and investor relations.
As I mentioned, there are two ways to boost a stock. The first is to do something productive, which Silverado has not. The second way is to give the impression that you are doing something productive. In this regard, Anselmo has been an expert.
In 1980, when the company was trading on the old Vancouver Stock Exchange, the stock peaked at $10.50, but soon fizzled out. In 1993, when it moved to the Nasdaq, it enjoyed a revival of sorts, trading as high as $3.50.
Not content to leave the stock's fate to mother nature, Anselmo has used many different tout services to boost the share price. Among them has been Robert Chapman, a U.S. newsletter writer who has been the subject of cease-and-desist orders in nine different states and was handed a 10-year stock market ban in B.C. in 1989.
Despite his best efforts, Silverado was not able to maintain Nasdaq's minimum stock price and was relegated to the dreadful OTC Bulletin Board in the United States, where it is now trading at six cents.
If we are to believe Anselmo, the flagging stock price is not the company's fault. It is the fault of that ubiquitous stock market bogey-man, the naked short seller (people who sell the stock short without first borrowing the shares, or making an "affirmative determination" that the shares can be borrowed).
This is an illegal practice, one that is difficult to prove but often cited by promoters who need to find somebody or something else to blame for their companies' flaccid performance.
Despite these predators, Anselmo is convinced he will prevail. "We're on the path to becoming successful," he insists. "We're very close. It's been a lifelong battle, but we will not quit."
Such gallant words. Winston Churchill in a Corvette.
dbaines@png.canwest.co...
SILVERADO'S 10 (MORE) LOST YEARS
Silverado Gold Mines Ltd. has lost more than $85 million US since its inception in 1963.
LOSSES
1997 / $4,414,772
1998 / $16,938,903
1999 / $1,449,391
2000 / $1,872,116
2001 / $1,677,974
2002 / $3,755,401
2003 / $8,519,169
2004 / $4,304,232
2005 / $3,394,107
2006 / $7,683,002
9 months to August/07 $5,330,229
Losses since inception $85,633,725
Figures in U.S. dollars
Feb 16, 2008
There's more than profits and losses to the stock market
There are two ways to boost a stock. The first is to do something productive, which Silverado has not. The second way is to give the impression that you are doing something productive. In this regard, Anselmo has been an expert.
www.canada.com/vancouv......
Mar 29, 2008
Silverado plant still just on paper
"Primary in mind is the parade of press releases from Silverado that have had the effect of 'hyping' this project and, in fact, misrepresenting the facts"
www.canada.com/vancouv......
Apr 2, 2008
Silverado a gold mine mostly for related company
Despite a steady string of boosterish releases promising shareholders imminent riches, the company has produced nothing but losses.
www.canada.com/vancouv.../...
April 19, 2008
Silverado racks up expenses with zero revenue attached
Silverado Gold Mines Ltd. is an interesting stock market creation -- nine parts brass and only one part gold.
www.canada.com/vancouv...
If OTC is "Over" the counter, do they have a 1/10 of a cent stock "Under" the counter? (UTC)
Is holding for 10 years considered long term? The ground breaking for the pilot lignite plant in Mississippi! Our BIG wheels, when asked where are they? They said all of a sudden they just disappeared? What happened to all the valuable dirt in Alaska they were going to sell? Maybe they can sell another 5 billion shares?
On Apr 19 12:38 PM Steven Johnson wrote:
> What are everybodies thoughts on a Silverados Timeline ? Summer is
> slow for Gold but Fuel Prices could be the driving force that drives
> this stock. Any Thoughts ??????????????
On Nov 24 11:17 PM Steven Johnson wrote:
> This is the old bullshit you pushed on other sites. This company
> is on the move with big names pushing it. Maybe you want to buy at
> low prices now and profit later. Be careful what you say. They have
> broken ground in the south. They will make it. They will be a Big
> Name.