Thursday, August 28, 2014

The Eagleville Project, Nevada

So a few weeks ago, a friend of mine in the industry called me and said, "There's a gold exploration project in Nevada, they want you to come and take a look at it." He told me the name of the company.

"That's too small," I said. At the time, the stock traded for 15 cents. The market cap was (and is) minuscule. "Even if I liked it, I couldn't recommend it."

"Come anyway," he said.

"How am I going to justify the expense?" I asked.

"They'll pay your airfare and hotel."



"Just what I want, to be squeezed into an economy class seat, shipped across the country like a piece of meat, then end up in Reno."

"You'll find it interesting," he said. "Come and see."

So, I went. And sure enough, the project was interesting, as you'll see from the video I'm about to post. But this is not a recommendation. I'll explain why.

Good points include ...
  • It's in a highly prospective geologic area.
  • It was previously a working gold mine. Often the best place to look for gold is in an old gold mine. The old-timers missed a lot, especially if they were chasing visible gold in veins.
  • The geologist, Tom Callicrate, really knows his stuff. 
  • Technology has improved quite a bit, and that could help the discovery process.
However ...
  • The company that owns Eagleville is very small. Its share price is low.
  • It has enough money to cover expenses for this year, but it will have to raise more cash.
  • The volume on the stock is very low.
  • I cannot emphasize enough how risky a gold exploration stock is, especially in an environment in which gold prices are drifting sideways to down.

And yes, it's near a working gold project. But that can be akin to the similarity between lightning and a lightning bug.  The jury is out until they prove they have a deposit.

One final point: You can buy working gold mines with good prospects for expansion at close to book value right now. Sometimes cheaper than book value. Maybe not for 15 cents a share. But they're producing mines. Eagleville is not.

So no, I do not recommend this company at this time. It has a whole drilling program ahead of it. Anything can happen. They might actually turn up a sizable gold deposit. They might not.

Here is the video ...

And if you want to see a longer version of this video, with extra footage at the end of Tom showing us lots of maps about the project and the area, CLICK HERE

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