The beginning of the New Year is historically a lousy time to be buying bitcoin.

As you can see from the arrows in the chart, bitcoin usually heads DOWN in January. Since 2011, bitcoin has had a cumulative return of MINUS 22 percent.

Only September (minus 42%) is worse than January.

Last January was a notable exception with a monthly return of 24%, but that followed the completely awful months of November and December 2019, when the price of bitcoin collapsed.

The traditional explanation for the slump is that late January/early February is the beginning of Chinese New Year, so you have the Asian version of the North America saying, “Sell in May and go away.”

It’s not just the Chinese either, many Asian cultures celebrate the Lunar New Year or spring festival including Indonesia, Malaysia, Thailand, and Vietnam,

Because the official start date of the Lunar New Year varies from year-to-year, I encourage people to read the Wikipedia article on the subject. In 2021 Chinese New Year festivities start February 12^th and end on February 26^th.

So We Can Safely Short Bitcoin, Right?

Not necessarily. Some big traders tried to bet with the trend and got their heads handed to them on a plate.

This is a screenshot of a Twitter “bot” that tracks liquidations on Bitmex, the largest overseas bitcoin derivative exchange in the world.

Investors (gamblers?) are losing ten of millions of dollars a day betting against the price of bitcoin.

There’s a huge short squeeze going on.

There are two major reasons put forward why “this time is different.”

One is the halving of bitcoin production that happened last May means that Chinese miners don’t have the same “swing” that they have in previous years. Hence the lessening of the Chinese New Year effect.

I will explain:

It estimated that two-thirds of bitcoin mining hashpower (i.e. the servers that control the bitcoin network) were based in China at beginning of 2020.

Some say that because of new regulations by the Chinese government you are going to see miners moving out of China (but I see that story every year, so I’m skeptical until it really happens).

Having said that, until May 2020, 1800 bitcoin a day were “mined” by the bitcoin network and distributed to the miners.

However, the bitcoin program cuts production of bitcoin in half roughly every four years, automatically.

So now best estimate is that perhaps Chinese miners produce at most 600 bitcoin a day, most likely less.

It has been widely speculated for years that Chinese miners working in partnership with Hong Kong bitcoin future exchanges like Bitmex manipulate the price of bitcoin to increase volatility and make even more money with derivative trading.

I wrote an article on how increasing price volatility makes easy money for crypto-traders who know how to hedge.

It is like throwing sticks of dynamite in a salmon-spawning steam: buy short contracts, dump $10 million of bitcoin in the open market, and then profit.

The sharks are still trying to swing the market their way– there’s too much money involved to just walk away – but their daily supply of ammunition got cut in off last May and now:

They are not the biggest fish in the crypto-sea.

US institutional buyers, like Grayscale Bitcoin Trust (OTC-GBTC), Square, Inc. (NASDAQ-SQ) and PayPal Holdings, Inc. (NASDAQ-PYPL), are buying up all the new supply of bitcoin and more.

Grayscale Trust in particular, is a massive whale.

As of December 30^th, it held $17 billion USD of bitcoin when the price was $29K. On December 1^st, it held $10.2 billion USD (price $19.5K).

After accounting for the 49% increase in the price of bitcoin for the month, we can calculate that Grayscale added $1.83 billion USD of bitcoin to their portfolio.

Assuming they bought the bitcoin at average price of $24K, that’s 76,250 bitcoin.

But only 900 “new” bitcoins are mined a day or 27,000 in thirty days.

Those two numbers pretty much explain why the price of bitcoin has been soaring the last quarter of 2020.

Conclusion

Will Grayscale continue to buy bitcoin in January at its current pace? If so, forget about the “January” dip.

Fortunately, the company posts the numbers on their assets accumulation nearly every day on their twitter feed.

In my opinion, if they continue accumulating during the first week of January, that’s very bullish, not just for the whole month, but for all of 2021.

But even if we see a correction in January, it’s going to be hard to stay bearish for long.

Historically, February is a strong month with a cumulative average return of 125% since 2011. March is okay with 10% return. April and May usually blow the doors off with returns of 220% and 360% (cumulative, since 2011).

But the real story is that crypto is going mainstream and in a hurry. For example, Paypal is now taking bitcoin.

Whereas banks once avoided crypto-clients like poison, financial companies like Silvergate Capital (SI – NASDAQ) (which we wrote about here) are embracing them and watching their share prices soar.

Just yesterday the US Office of the Comptroller of Currency said that banks can use digital coins to settle payments.

We will soon know if US financial institutional acceptance of bitcoin puts an end to the January blues.

APOLLO CEO: THE INTERVIEW

This is the second in my two-part series on Apollo Healthcare and Beauty (AHC – TSX). 

In part I, I stepped through the Acasta disaster that made Apollo a public company, how the failure of Acasta left Apollo for dead, and how the COVID bump resurrected the stock, making it a 10-bagger so far this year.

In Part II here I will give you the perspective of co-CEO Charles Wachsberg, who I interviewed last week.

Wachsberg helped fill in the holes: why Apollo went public, how Acasta fizzled out, how he and his brother Richard managed to clean up the mess, and why the future is looking very bright.

Wachsberg is, if nothing else, a survivor.

After Apollo went public the Wachsberg brothers were left holding a very bad hand.   But they persevered.  

Apollo survived.  

Recently, their COVID products have taken sales through the roof.  Apollo sells personal care products and hand sanitizer and soap—which have been flying off the shelves.

This was all very quiet—no promotional press releases—until the Q2 financials were released—showing $28.4 million in EBITDA. (The previous quarter was $5 M and it had been negative EBITDA for a few quarters before that)

The dormant stock took off—straight up that day from the 65 cent prior close to over $2!

Then no more news until Q3 came out 3 months later—this time with over $30 million EBITDA!  And they said they were debt free!

The stock has been on fire – up 10x since the spring.  The company is generating gobs of free cash.  

Yes, it is a COVID bump.  But this was a $40 million EBITDA business before before the company was saddled with the public market legacy of Acasta and debt (all of that well pre-COVID)

This is one of the two top private label personal care product manufacturers in North America. 

This business is – for the first time in 4 years – in a position to grow.

The cards are in the Wachsbergs favor for the first time since being thrust into the public markets. 
 

An Unlikely Public Company
 

In an hour-long chat, Charles Wachsberg does not come across as a “market” guy (i.e. not a stock promoter). 

This is a guy whose name and reputation are very important to him.  He and his brother are very involved in the Toronto business community as well. 

In any normal circumstance, being private is exactly what would have happened.  The Wachsberg’s would have ran Apollo privately and efficiently out of the public eye and few of us would have ever known the name.

But that quiet, easy life was not in the cards.  Instead, the Wachsberg’s were dropped into the public markets in a painful trial by fire.

Apollo had little need for public markets.  The business was already generating cash – in the year prior to the acquisition EBITDA passed $40 million.  They operated from the position of the incumbent, as 1 of the 2 large private label manufacturers in North America.

It was a success story that had taken nearly 30 years for the Wachsberg’s to build.  They were in no hurry to sell their stake.
 

Building a Better Private Label Brand

 
The brothers founded Apollo on a simple premise – to build a better private label manufacturing company, one that looked forward and innovated.  They set their sites on personal care products: soaps, shampoos, creams and body washes.

At the time, the private label business was built on a “reactive” model.  There was little innovation – private labels would enter new markets 1 to 2 years after a national brand.  Their niche would be a cheaper, but usually inferior, product.

The Wachsberg brothers decided to take a different approach – a page out of the playbook of David Nichols, the face of Loblaw’s (Weston family) President’s Choice (For our American readers, this is a very large national grocery chain in Canada—like Safeway where you are).  They looked to create a private label brand that was as good or better than the national brand.  A product the customer would prefer.  And they were HUGELY successful.

Apollo differentiated their products through proprietary bottle molds and standalone formulas.  Wachsberg said they would “vigorously challenge national brands for their chemistries” and looked not just to emulate the big brands but improve on them.

He added that Apollo also let the customer decide what they would produce.  Rather then “selling their SKU” – convincing the customer to buy the existing line, Apollo flipped that on its head – finding out what the customer wanted and making that happen.

The model turned out to be a resounding success.  North American  customers like Walmart, Costco, Loblaws and CVS relied (and still rely) on Apollo to create differentiated private label products.

The business grew.

Helping drive the business was Charles passion for it.  He talks about Apollo’s “product culture” and how Apollo is “painting a canvas” of products that is “unique to the needs and aspirations” of each customer, which he describes as “sacrosanct”.  For a time, Charles even wrote a blog dedicated to the private label product universe.

  The brothers were left holding a bag they never filled.  Being the only ones left, they had no choice but to scramble to keep it together. 

It was the same company they had always owned, but it was now burdened with $86 million of debt—and it was now a public company pariah.

Talking to Charles about this time period, what really came across was just how difficult it was on him both professionally and personally. 

Seeing your business crippled is hard enough.  But having your name and reputation dragged through the mud, for something you had no part in, only adds insult to the injury.

The next two years were spent cleaning up the balance sheet, running the business on a shoestring, and trying to scrape their way back to even.   Charles describes the time as being “effectively janitors”. 

Thirty million dollars of commercial bank debt was refinanced.  Another $30 million came from the brothers themselves. 

The latter was out of necessity.  When no one would lend money to Apollo the Wachsbergs took the unusual step of doing it themselves, to keep the business afloat.

Through it all the Wachsbergs operated the business as they had always done.   Customers first, innovating new products, keeping costs down.  Even amid all the chaos, Apollo has consistently been on the Canadian Business list of Best Managed Companies for 17 years running.
 

From Adversity to Opportunity

 
The feeling of satisfaction began to creep back into the business this year, even before the pandemic.  COVID has not transformed the business, only accelerated that transformation.

With the company’s debt paid off and generating plenty of free cash, the opportunity for growth has re-appeared.

Front and center is the state-of-the-art manufacturing facility.  The Apollo facility is the largest industrial building constructed in Toronto this millennium.
 

Source: GoogleMaps

The facility is the newest in their sector-class.  It has plenty of excess capacity.  Charles estimates that it is currently operating at only 45%-50% utilization.

The building, its people and Apollo’s supply chain present Apollo with a unique growth opportunity compared to peers.  Wachsberg says that the two biggest constraints on growth in this sector are infrastructure and supply chain.  Apollo has both, meaning they can grow “without any material investment in capex”.

Wachsberg was tight lipped about acquisitions but did not rule them out.  For the first time since becoming public, Apollo does have the currency of their stock for acquisitions.   That includes a wide range of possibilities, both upstream and downstream of the business.

But Apollo does not need acquisitions to grow.  Growth can come from the existing customer base, adding new SKUs and expanding existing labels.  The existing customer base grows at 5-10% a year on their own. 

New customers and market share grabs can be layered on.
 

Run the Business and the Rest Takes Care of Itself

 
Suffice to say that the public markets have not been an enjoyable experience for the Wachsbergs.  They aren’t the sort that revel in the spotlight.

It seems no coincidence that Apollo’s investor relations are as bare bones as I have seen.

Charles said that more time will be spent reaching out to investors.  A team has been hired to revamp the investor site.

But the focus will remain the business. 

The Wachsberg’s remain the biggest shareholders of Apollo, making them the most invested – both in cash-dollars and emotionally – in seeing the turnaround continue.  Each brother owns 23% of the outstanding shares.

Even after the move this year the Wachsbergs have not recovered to their pre-deal high-water mark.  There is more work to be done.

Charles admits that the COVID bump will not last forever.  But he does not think that it will disappear entirely.

The last two quarters Apollo operated at a run rate of $120 million EBITDA.

EBITDA translated into free cash flow almost 1 to 1.  Apollo generated $59 million of FCF the last two quarters.

If we see the trend continue until the fourth quarter of next year, Apollo will have not only paid off the debt but banked over $100 million in cash.

At that point, the business may moderate.  But remember, this was a $40 million EBITDA business in 2016 before it was acquired.

What will the annual EBITDA run rate post-COVID?  Your guess is as good as mine, but given the last two quarters, $80 million does not seem out of the question.

Consumer packaged goods companies all trade at multiples north of 10x EBITDA.  Most are in the 13-15x range—which would intimate an Enterprise Value (market cap + debt, but AHC has no debt!) of $1 billion+.

Apollo has 73 million shares out, so you can do your own math.

And I have not factored in how the Wachsbergs will continue to build the business.  

I have to tell you folks, when I heard this story I wanted to ask Wachsberg for the movie rights—all for what happened in 2017-2018.

It has everything—high profile business and politicos at both the board and management level, a failed strategy and a slow moving train wreck that turned into a disaster—only to have the good guys roll up their sleeves and rescue it.

This is a good news story all around that came out of an embarrassing debacle.

Investors should also note there are also warrants—AHC.WT-TSX—that expire in January 2022 with a strike price of $12.00.

Keith Schaefer

APOLLO HEALTH AND BEAUTY

Apollo Healthcare and Beauty (AHC – TSX) has stunned the Canadian stock market by issuing back-to-back quarterly financials that had

1. YoY revenue jumps over 100%
2. EBITDA of $28.43 million and then $30.97 million (the six previous quarters were under $5 M and most were negative EBITDA)

In just two quarters, the company became debt free, and the stock has jumped almost 10-fold in four months.

Naturally, you would expect the Street to be all over this—an amazing stock market darling from pennies to dollars, and it’s located right in Toronto, the financial capital of the country….

But nope.  Nothing. Nada. And folks, the story I’m about to tell you, tells me…that the The Street isn’t just unaware—it’s avoiding Apollo.

For regular retail investors, it might have something to do with Apollo’s website—www.apollohealthcarecorp.com—which has all of two links to SEDAR, the Canadian equivalent of EDGAR, where all company records can be searched. 

There is no info on management, the business, financials—no positive touchy-feely copy or pictures to show off their products or business.
 

With these kinds of numbers, you would expect that the stock at these prices would be expensive.  But a peer comparison shows that it’s not.  In fact, it is downright cheap.

And no one, I mean NO ONE, on the street is even covering the story.

How is it possible that a big growth story that is hugely profitable could slip through the cracks?

Easy – this company was literally the biggest boondoggle in Canadian finance only two years ago.  It involves some of highest placed names in Canadian business.  It was a mudstain on everyone involved.

But now…that mud has turned to chocolate.  Healthy and beautiful chocolate.
 

The SPAC that went SPLAT

Apollo was originally incarnated as Acasta Enterprises.  Acasta came to market in 2015 as a special purpose acquisition vehicle, or SPAC.

Most investors know about SPACs nowadays—they are blank cheque companies often with a big name management team who are given the task of buying a great business or idea and growing it. 

But back in 2015, they were new.  In Canada, they were virtually unheard of.   Acasta was one of the first SPACs to ever go public in the Canadian market.

Acasta was not just any SPAC.  It was virtually a who’s-who of the heavy hitters in Canadian industry. 

Acasta’s directors included:

-Belinda Stronach, a former VP of international of auto parts Magna and daughter of the CEO, magnate Frank Stronach.  She was also a federal conservative MP and ran for the federal leadership!

-Geoff Beattie, who was once a partner at storied Torys LLP law firm and president of Woodbridge, the investment arm of the Thomson family

-Gordon Nixon, former CEO of Canada’s largest company, the Royal Bank

-Hunter Harrison, former CEO of Canadian National Railway

-Tony Melman of Onex Corp., a high profile private equity firm

With an all star cast Acasta set on a bold acquisition strategy which promptly fell flat on its face.  The company slipped into the most common traps of an acquisition focused business: overpaying and taking on too much debt.

Acasta acquired three companies in late 2016.  Two of them were private label consumer package goods (CPG) companies.  One of those was Apollo (The purchase price was $390 million) while the other was JemPak Corporation. 

The other business they acquired was an airline leasing business owned by Stellwagon Finance Company.  In total they spent $1.2 billion on the three acquisitions.

The details are spotty but it seems like the airline leasing business was the real drain.  The company began to lose money and could not pay on its debt.

By early 2018, the airline business was sold for about 60% of the US$270 million it was purchased for. 

Jempak, which was purchased for $135 million, was sold later in 2018 for $118 million.

Melman left in 2018.  The board was mostly disbanded.  Everyone was embarrassed to be associated with it.  It was a mess. 

Left in the rubblewas the one remaining acquisition – Apollo.  A well-run, previously owner owned and private company that had suddenly found itself in the middle of a public company maelstrom.
 

The makings of a good turnaround story.

 
There are generally a few elements that make up a good turnaround story. 

1. Nothing wrong with the business
2. Nothing wrong with management.
3. Something happened to throw a wrench into things.

In other words, the best turnaround stories are the one’s you never really had to turnaround.  You just had to pull the wrench out.

That is what we have here.  There is nothing wrong with the business.

Apollo operates a very straightforward business.  They sell an array of personal care products—16 product lines in 5 categories; everything under the sun:
 

Source: Apollo AIF

Most of these products are white labeled.  That means they aren’t selling them under their own brand, they sell them to another company that puts their own branding on them. 

They collaborate with all the big Canadian retailers.  Walmart, Loblaws, Costco, Target, Shoppers, CVS. Flip over the big jug of hand sanitzer from Costco – that’s Apollo.   Walmart’s private label Equate brand – that’s Apollo.

They’ve one a number of awards for their role as supplier to these huge firms:



Source: Apollo AIF

In a year where we have learned just how little Canada manufactures, Apollo is a Canadian manufacturing success story.  All these products – manufactured right in Ontario. 

Apollo has a 486,000 square foot product development and manufacturing facility located in Toronto, Ontario.  The facility was described to me as “brand spanking new” facility with a $100 million in steel alone in it.

Apollo is flying so under-the-radar that it isn’t even funny.  There is no sell side research on the name.  No one is talking about this story except for a friend of mine that introduced me to the name.

The management team is great, but they are about as far from promotional as you can get.

My contact that introduced me to the name has talked to management.  He told them, “look you got to put an investor presentation out there, you got to talk to more guys”.

But you know what is stopping them?  The business is too busy.  There is simply too much real work to be done to takes hours out of the day meeting with investors.

And this management team is not a public company management team.  They are just interested in running the business.  The CEO, Charles Wachsberg, has been doing this for over 30 years. 

He has built a relationship with brands and they trust that he can deliver on time with SKUs.  His #1 priority is clearly the business.  He didn’t ask to make his company public.  He just got an offer a few years ago that he couldn’t refuse.

All of this may be bad for the share price, but it is arguably good for investors—because this is a business that should be worth more than it is trading at.

The reason for the blow-out results is that with COVID-19, we have all become clean-freaks.  In particular, Apollo white labels hand sanitizer to all the big chains. 

Do I really need to say any more?  

This has been the big driver for top-line and obviously EBITDA growth.  Pre-COVID, EBITDA was as high as $5 million per quarter, but sometimes it was negative. Apollo produces everything they sell, from shampoo to mouth wash.  They have been doing it for years.

The stock took off in August.   The Holy Cow!! moment was the Q2 earnings release.  Apollo blew everyone away – and by that I mean everyone who even remembered the stock existed – by doing $30 million of EBITDA.   In a single quarter. (for the math-challenged, that’s an annualized rate of $120 million EBITDA)
This from a stock that, at the beginning of August, had a $50 million market cap. 

Obviously, a mispricing was at hand.  The stock popped to $2 and then rose from there.  Now it is close to a $6 stock.

Does that mean that the run is done?  Well, think that this was nearly a $400 million business when Melman bought it.  And it is a better business now.

They recently received Health Canada approval for wipes.  That would be another product in their arsenal that should be a big winner.  And their liquid soap business will almost certainly remain strong post-COVID.

I get that vaccines for COVID are coming within days. BUT…cautious attitudes will definitely NOT go away. 

Things like wipes aren’t going away.  We will be wiping down tables at restaurants, desks as school, door knobs for years after COVID fades into the past. 

I think it will be the same thing with the hand sanitizer.  We have at least a couple of years of vigorous hand sanitizing and even after that it will linger at higher levels than before COVID. 

Another iron in the fire is a Health Canada cannabis/CBD license for skin creams and beauty products.

More growth could come from acquisition.  As the street comes around to the story, the potential for Apollo to acquire will show itself. 

Right now, the brands that Apollo delivers are almost all in white-label format, where the brand mark-up is done by the big chains. 

Apollo has everything to put together those kinds of brands. 

A well-placed acquisition of a branded product line could bring that mark-up in house.

What is the stock worth post-COVID?  That is the question.  Based on the last couple quarters, we are looking at a $100 million+ run rate in EBITDA.  Can that run rate be sustained post-COVID?

CPG—Consumer Packaged Goods—companies trade at high multiples right now.  IF Apollo can keep that kind of annualized EBITDA, a 10x EBITDA multiple, which would be more than a double from here, would still look cheap.
 

Without a question that includes a COVID bump.  The hand sanitizer sales have been through the roof and that is largely COVID.  So maybe that multiple is a bit lower, which still leaves plenty of upside.

This is Part 1 of the Apollo—the ghosts of Christmas past and some of the present.  Tomorrow is Part 2—an interview with CEO Charles Wachsberg.

TIM TWOMEY IS GUIDING THE DRILLING FOR
STONE GOLD (STG-TSXV)–IN RED LAKE

The West End of Red Lake Is Now Open For Business
 

Who Is Mr. Red Lake?

And How Did This $3 Million Market Cap Get Him? 

Thanks to recent discoveries by Great Bear (GBR-TSXv) and Trillium Gold (TGM-TSXv), the Red Lake, Ontario Gold Camp is SMOKING HOT……

How hot?

So hot that even Mr. Red Lake himself can’t get a hotel room today.  This is a man who was part of the team that discovered 8 million high grade ounces for Goldcorp in the 1990s.  His team turned Goldcorp from a struggling low grade miner into a 5-star, high grade, world famous, billion dollar market cap.

So many people have flocked into Red Lake that there is literally no place to stay.  The one road in from Vermilion Bay is a 150 km driveway. Men are scrambling to find places to live wherever they can.

I can only remember seeing any sort of resource play buzzing with this much activity once before.

In the middle of the Bakken oil boom I flew from Vancouver to Calgary, to Regina….then drove down to tiny Estevan, pop 13,000, in southern Saskatchewan.  Estevan was the heart of the Canadian Bakken oil play.

My flight to Calgary from Vancouver was near empty, but the flight to the much smaller Regina was packed. 
Regina—great city but not a tourist hotspot.

And then when you get to Estevan, whoa…….I couldn’t believe my eyes.

I’m not kidding you, there was four hotels being built.  There was a trailer camp that had to have 350 units. A buddy of mine has some real estate there that he was renting out and just laughing all the way to the bank.

All of those people were flocking to Estevan – because the region had hit the oil motherlode.  The Estevan Bakken boom was real. 

Stocks of those Bakken players were hot too in those days.   Just like the town.

That is Red Lake, Ontario today.  While this camp has produced over 30 million ounces since the 1940s of some of the highest grade gold ever—it was quiet for a lot of years.  Then came some big Red Lake gold discoveries

Great Bear Resources – 15 cents to $15 in just over 3 years—a 100-bagger!

PureGold – 45 cents to $2.70 in the last 12 months

Trillium Gold –27 cent to $2.75 this summer—a 10-bagger in weeks!

and….Red Lake is once again BOOMING.

But this is all about real gold, not black gold.

That is good for Red Lake. 

Not surprisingly, Mr. Red Lake is back on the scene and he is ready to make some noise with yet another high impact Red Lake property.

For speculative and resource investors, Red Lake is the place and the Mr. Red Lake is most definitely the man.

The exciting part is that these new big discoveries are not in the main East Red Lake camp — they’ve actually expanded the camp to the south (Great Bear) and the west (Trillium). That has opened up the potential for many more discoveries.

 
Tim Twomey Is Ready To Drill
A Red Lake Property With NO Modern Exploration

Mr. Red Lake is Tim Twomey who for 14 sweet years was part of the geology team with Goldcorp in Red Lake, starting in the 1990s. 

Goldcorp became known as a 5-star, high grade gold producer (it was bought out by Barrick last year)—but they struggled for years with their Red Lake mine.  Then Twomey and the team discovered some much higher grade veins about 1500 feet over from where they were mining.

The rest is history.  Over the next few years, they put 8 million ounces of high-grade gold—almost two ounces per ton (50-60 g/t+) on the scorecard. 

So let me be clear:

This is THE GEOLOGIST you want trying to find another multi-million gold score in Red Lake.

What Twomey was a part of at Goldcorp is an unparalleled mining success—turning Goldcorp into a multi-billion dollar market cap.

Now Twomey is back in Red Lake, and I’ve discovered the next play up there that is using his invaluable expertise.

The tiny Red Lake play I’m going to introduce you to tomorrow:

1. Is right beside Trillium Gold, with some high priority targets in the same geology as TGM’s discovery
2.  A 2nd set of high priority targets on trend with a past producer
3. And trades for under 15 cents, with a market cap of less than $3 million
4. And has Tim Twomey spotting the drills

In a recent interview, Tim educated me on one very important point—everyone thinks of Red Lake as super deep and super high grade.  But the original Campbell Mine, Goldcorp’s mine, Great Bear and Trillium—all found high grade gold at surface, and then kept drilling and digging to get the super high grade underground ore.

So you can find a lot of gold for a little amount of money up there.

A Sub-$3 Million Market Cap With Twomey Directing The Drill….

Tim Twomey’s entire three decade plus career has been very exciting.  Success has followed him in a remarkable way.

After 14 years of repeated success finding Red Lake gold for Goldcorp he moved on to Premier Gold Mines in 2008. Again big success… where he and his team picked up a Northwestern Ontario Prospectors Association Discovery of the Year Award.  This was a Hard Rock project in Geraldton, Ontario—6 million ounces and another rocketing stock chart.

That isn’t a bad looking resume for a geologist.  14 million ounces of gold discovered.  At today’s gold price of $1,800 that is more than $25 billion worth of gold.

With those 14 million ounces already on the ledger, Twomey is a gentleman of leisure now, and can pick and choose where he works.  He doesn’t need to find the good deals…..anyone with a good deal comes to him. 

That is why I’m so excited that HE IS BACK.  The only reason for him to get interested in anything is–because the opportunity is just too good to ignore.  Not only is he back, but he’s back in Red Lake where he is the man that every company would want looking for gold.

The crazy thing is that he is back with has an asset that he clearly loves.  He is pointing the drill for that company—which has a market cap of just under $3 million. 

Clearly the market hasn’t picked up on this company or the fact that Twomey is involved.  Every other publicly traded Red Lake operator has already had a big run thanks to Great Bear and Trillium success —— none of those other stocks have Mr. Red Lake pointing the drill. 

Folks, all exploration is high risk.  But a 15 cent stock means that downside is relatively small, but the upside—just 23 million shares out—is explosive—IF THEY HIT A GOOD HOLE. 

Do Not Miss My E-Mail Tomorrow!!!

Setups like this never happen……

This is a sub-$3 million dollar market cap this morning.  It’s about to drill a very prospective property–in the hottest gold camp in the world; Red Lake. Tim told me that he loves the location, but what he loves even more is the fact there is no modern exploration on it—virgin ground.

This junior landed this property before this Red Lake boom.  This is exactly like buying acreage in the Bakken before they cracked the code.  Acreage values there went from $2,000 per acre to $180,000 per acre —— interest in Red Lake has done the same thing over the past 18 months.

When the market realizes about Twomey and the asset that brought him back to Red Lake…well I think this stock is going to be a lot of fun to watch before the company even does anything. 

Neither the Red Lake exposure or Twomey are priced into the stock in any way.  I expect that to change, starting tomorrow!

Tomorrow I’m going to tell you everything you need to know:

1 – Details of the Red Lake asset that Twomey is chomping at the bit to drill

1. The name of the former producer it’s on trend with
2. The geology type that Trillium has that this micro-cap has

2 – The low valuation this stock has to relative to every other Red Lake operator despite having Mr. Red Lake and an asset he loves
3 – The tight, tight, tight share structure that sets up an explosive situation with this tiny market cap
4 – And of course the name and ticker symbol of this stock.

I used my network of mining CEOs to find this gem. This is what I do all day long–look for stocks like this! I now own 3% of the company. And you can buy it at the same price I did.

Look for my e-mail tomorrow.

Keith

The Best Route to 2 Million Ounces Gold?
Start with 500,000 oz–in the Abitibiti Greenstone

DO NOT MISS MY EMAIL TOMORROW!!