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Chris Vermeulen
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Chris Vermeulen the founder of Algorithmic Trading Systems. This automated investing system is designed for individual investors and traders. He is also the editor of the TheGoldAndOilGuy newsletter which is designed for gold market traders providing quality ETF Trade Alerts,... More
My company:
AlgoTrades Algorithmic Trading Systems
My blog:
TheGoldAndOilGuy - Gold Market Traders
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Technical Trading Mastery - 7 Steps To Win With Logic
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  • A Possible Takeover Target In The Making!

    Headquartered in Canada, Morro Bay Resources Ltd. (TSXV-MRB) has just acquired a 51% interest in an advanced stage silver and gold project called Peñoles in the Durango Silver Belt, Mexico. The project offers up significantly more than one sees in junior mining plays these days. As discussed further below, the project already has an initial Resource Report for two separate deposits (open in several directions), and overall the project looks like it has significant growth potential. Perhaps even more striking is the fact that the Morro Bay Property is located in one of the most active (and lowest cost) mining district in North America. Several mid-tier and larger mining companies have built low capex operations in this district and are actively growing their production profile by acquiring projects similar to Morro Bay's Project.

    From an investor's point of view, the fact of significant previous transactions in the area points us to believe the Morro Bay property could very likely be another take-out target. If such occurs, it should result in a significant gain in share value. Two transactions recently occurred and were based on properties very near to Morro Bay's property and resulted in significant payments to the shareholders.

    First in December 2013, Argonaut Gold Inc. acquired the San Agustin Project from Silver Standard Inc. for total consideration of $75 million. Similar to the Morro Bay Property, at the time of purchase a mine had yet to be built and the resource estimate estimated Indicated Resource of 121,000 ktonnes with grades of 0.41 g/t gold and 12.3 g/t silver (see the Argonaut news release dated November 5, 2013).

    Similarly, in 2013, Coeur Mining Inc. purchased the La Preciosa project from Orko Silver (at the time a TSX:V company) by acquiring all of the shares of Orko for consideration totaling $384 million. This represented a value of CAD$2.70 per Orko share, a premium of approximately 71% to the Orko share price. The La Preciosa Property was the only material asset of Orko at the time. No producing mine was present at the time. The mineral resource and mineral reserves estimate provided by the Orko NI 43-101 Report dated October 25, 2012 reported an Indicated resource of 29,700 ktonnes with grades of 0.20 g/t gold and 104 g/t silver.

    As announced by Morro Bay in compliance with securities laws, (and as further discussed below) Morro Bay reported an initial resource estimate for one deposit (El Capitan - primarily gold) 20,722 ktonnes with a grade of 0.46 g/t and for the second deposit (Jesus Maria - primarily silver) 7,573 ktonnes with a grade 62.3 g/t of silver (the full NI 43-101 Resource Report can be found at These grades are very similar with those of the above two referenced sales. As a result, it is possible that Morro Bay and its partner (owning 49%) could see themselves being offered $75 million, more or less for control of the Project. That works to about $0.375 per Morro Bay share (using an estimated outstanding share float of 100 million shares after completion of Morro Bay's financing). Currently the stock is trading around a nickel. Note that this is just speculation and assumptions that are loosely based on previous transactions.

    Regardless, it appears that with the transactional history in the Durango Mining District, Morro Bay could be the next one to be purchased. So far the Company has consistently reported good drill results and they are planning a 20 hole drill program that will delineate the extent (near surface) of the known deposits. If results meet expectations, the Company will have the information required to advance the project to a PEA level assessment (Preliminary Economic Assessment) and things should get exciting.

    Morro Bay is initiating a private placement financing opportunity for investors. Seeking to raise up to $1,500,000. The company is offering units consisting of 1 common share and 1 share purchase warrant at a unit subscription price of $0.05. The warrant terms of the financing indicate an exercisable option for one common share at $0.05 during the first year and for $0.10 during the second year. $1 million of the funds raised will be dedicated toward exploration at the Project, while $500,000 will be allocated for corporate purposes.

    A recently listed junior mining company, Morro Bay presents a strong position in the industry, as it maintains an experienced leadership team. The company's Board of Directors and Executive Management team, presided by CEO, John C. Zang, presents experience and expertise in public junior companies along with strong exploration and asset management skills and prior success in generating shareholder value. During the last 15 years Zang has been a director and/or officer of many junior companies provided substantial value returns to shareholders (almost always over 5 times their initial investment over a less than 3 year span per company). It appears as though Mr. Zang is prepared to do it again in Morro Bay. Mr. Zang states that "I look for valuable assets that larger companies will want to acquire on a timely basis. With the Morro Bay Mexican gold and silver property we have something which I believe places Morro Bay as a significant available seller to the majors around us." As shown in the map below there does appear to be significant players in the area:

    (click to enlarge)

    As indicated above, this is not just a blind prospector looking for gold and silver. Morro Bay has found the gold and silver-it is creating value and has significant potential. It seems like this represents a solid opportunity to take a stake in silver and gold play that MAY be sold for many times the current trading price. Currently, you can get an even greater exposure by participating in the company's private placement. If you are interested please email me at and I will direct you to the proper company representative.

    Chris Vermeulen

    Disclosure of Interest and Advisory Cautions: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn't well known. Technical Traders Ltd. and the author of this report has been paid by Morro Bay Resources Ltd. In addition, the author owns shares of Morro Bay Resources Ltd. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author's views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

    Jul 07 1:06 PM | Link | Comment!
  • Core Traits Of Successful Junior Exploration Stocks – Hidden Gems

    The Time Has come again to own a few very special situation resource stocks that I believe will sky rocket in value over the next few months.

    I have not owned any junior exploration companies since 2011 when the top was formed in the sector, and in fact I shorted miners early this year for some decent gains.

    But I believe now is time to add a few small positions to my portfolio which should provide big rewards during a time when the overall equities market and financial system are about to struggle.

    From being involved in the precious metal market since 2001 I have seen numerous exploration companies succeed and even more fail. But what is important to understand is that each of these winning companies had the same core things working for them.

    Characteristics among Successful Exploration Companies:
    1. Properties located in a proven resource rich zone
    2. Properties explored and have proven value in the ground
    3. Low-cost operation and logistics for transportation ore and supplies
    4. Management team which proven track record of success
    5. Market timing - completes exploration for being acquired or starts producing just before a resource bull market.

    These core characteristics are what allow companies to emerge as buyout targets and get acquired or become low cost producers. Both of these outcomes can generate a substantial increase in share value.

    While junior producers can generate more share value growth than that of a company being acquired, they typically take more time to mature and become known.

    But, junior exploration companies who have fully explored their properties and know the value being stored in the ground through the use of drilling and a PEA, provide a much different type of potential reward to its shareholders.

    When these tiny, unknown hidden gems are acquired, investors tend to see the share price gap higher to the purchaser's value and stay there, to generate gains of 6x or more return on investment in many cases.

    Recently I shared my junior oil exploration stock I own with my followers. It is becoming a producer as we speak and the next couple weeks are going to be exciting. Its share price has surged from 6 cents to 24 cents and the crazy part is no one knows about it yet. (OTCPK:CRRDF)

    Also a few weeks ago I shared two junior gold and silver exploration companies which will become producers. One should start producing within a couple weeks, another is still a few months out, but when they do I expect share value to rise substantially. (OTC:CMCXF, OTCQX:DTVMF)

    In a couple days I will share with you another stock I personally own. This is a silver stock and provides a different type of investment opportunity than normal. This type of play should be in your portfolio for the coming resource bull market I expect to start later this year.

    Get My Hidden Gem Stock Picks Free:

    Chris Vermeulen

    Tags: CMCXF, CRRDF
    Jul 05 11:01 AM | Link | Comment!
  • The Die Is Cast

    Since the October rally ended, the SPX formed what looked like an "extended distribution phase" in the form of a rounding top. This is even more apparent on the Dow Jones Composite Index. Early June, it dropped below its 100-DMA, it slightly breached its December low, but rallied. A second attempt was made to break through which also failed. The rallies found resistance at the 100 MA and last week, a third attempt at breaking the bottom trend line also failed … or did it?

    With Greece's default the Dow Jones index is completing its rounding top/descending triangle pattern by finally making a new low. A Monday morning opening gap to the downside could be the perfect way to end this formation. If so, this could be the beginning of the correction which has long been expected.

    Current Position of the Market

    SPX: Long-term trend - Bull Market

    Intermediate trend - Waiting for confirmation that the ending diagonal is complete.

    Short trend - Neutral

    Greece's decision to hold a referendum on July 5 and not to accept the final offer made by its creditors resulted in a Greek debt default and is currently unsettling to markets. Should that be the case, SPX should follow suit by extending last week's decline.

    This could be the end of the 7-year cycle we talked about, closing its grip on the market by applying pressure which is increasing gradually every week.

    USA markets will be closed on July 3. It will therefore be a shortened holiday week of trading. My current concern now is whether or not World equity markets will resume a 10% correction down or more. This period of a cycle that we work with has a very high historical correlation to 10% or greater reversals in the DJIA. The question is whether that decline has already started.

    We defer to our models for the confirmation of this move and any other future moves.

    Gold fell to a low of 1167.10 on Friday, June 26. . This may be important because Silver fell to a low of 15.45 on Friday, June 26, well below its low of the past three months.

    Something big may be in the works. It is ironic that the Greek debt default, the lack of a conclusion of the USA/Iran negotiations and The Supreme Court's decision to uphold Obamacare subsidies of The Affordable Care Act are ALL historical events occurring at the same point in time is not a random act.

    This decision upholding the IRS rule giving all Americans access to premium tax credits, millions of Americans can breathe easier today knowing that there is access to health care.

    I believe that The Supreme Court validated President Obama's massive power grab, allowing him to tax, borrow, and spend $700 billion that no Congress ever authorized. This establishes a precedent that could let any president modify, amend, or suspend any enacted law at his or her whim. President Obama has already creative secret deals that Americans are not yet aware of. I fear that these unchecked political power in the Executive branch will be misused again and again by the President.

    At this time, we are currently experiencing a new "socio-politically-economic" revolution. The passing of this Affordable Care Act (aka Obamacare will continue to bankrupt the county and many of the people in it. It is only affordable for some in terms of lower premiums. The other side of the coin is that deductibles are so high that many still cannot afford health care under this Act. For them, it is anything but affordable.

    The yield on the benchmark 10 year note closed last week at 2.26%. This week's close was 23 bps higher at 2.49%. The 30 year bond yield closed the week at it 2015 high of 3.25%. Current financial market conditions with low levels of interest rates have resulted in negative yields for some Treasury securities trading in the secondary market. Negative yields for Treasury securities most often reflect technical factors in the Treasury markets related to cash and repurchase agreements markets and are at times unrelated to the time value of money.

    We had a confirmed signal to exit the ETF "TLT" on June 3, 2015 at 118.39. Today, its current prices 115.23, I am expecting this price to go lower.

    Learn What Is Happening and Profit: Global Financial Reset Alerts

    Chris Vermeulen

    Jun 30 11:57 AM | Link | Comment!
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