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Seabridge:
Taking It To The Shorts By : David Bond Editor, the
Wallace Street Journal |
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Wallace,
Idaho – A 15th February hatchet-job by Barron's writer Bill Alpert on Canadian gold
explorer Seabridge Gold, (AMEX:SA) entitled “There's (Possibly) Gold In Them Thar
Hills,” followed up with similar negative sentiments expressed by
Citron Research on 10th March, ran the short interest in Seabridge up to some 8 percent of its market cap. According to
stock watchers, a massive shorting of Seabridge
began a few days before Citron came out with its report, and we all know
Barron's proclivities when it comes to gold: Barron's loves gold about as
much as George H.W. Bush claimed to love broccoli. The estimable Alan
Abelson, who otherwise credibly chronicles the demise of the free economy,
protests gold with the fanaticism of a PETA rally protesting the cruelty of
pouring salt on slugs. We wonder if this
is yet another case of pseudo-journalists and analysts quietly putting out
“the word” before they're about to trash or front-run another
stock. Having watched such antics frequently on the WWW, even on one heavily-trafficked precious metals site, we believe anything unethical is possible. Front-runners and
bashers are a dime a dozen, but we might have hoped for better from Barron's.
Alas, Alpert trashed Seabridge with the vehemence
of a Southern Baptist railing against drunks. Citron went a step even
further, describing Seabridge as a “mature
stock promo, the overt manipulation of public perception to sell shares of
dubious value.” It took Minyanville, a delightfully irreverent financial website
featuring the commentary of Hoofy and Boo (Hoofy is the whisky-fired bull and Boo is the pot-smoking
bear), to catch the shorts with their shorts down. A Lance Lewis post on Minyanville the day after the Barron's screed appeared set the
record straight. Lewis noted that
contrary to the disinformation rendered by the Dow Jones surrogate, insider
buying and selling in Seabridge was net long.
Alpert had only reported on insider sales, not insider buying. As Minyanville's Lewis concluded: “Nobody
said this business was easy, but to imply that (Seabridge
CEO Rudi) Fronk is some sort of pump-and-dump
artist or “Bre-X” promoter is just
plain false.” “(T)he journalist that wrote this Barron's story was
obviously fed a story by an interested party (i.e. – somebody that's
probably responsible for the recent sharp rise in the short interest) and
then failed to do his own homework.
I can’t wait to watch the panic when this large short in the
stock inevitably gets squeezed. Just wait until the pre-feasibility on KSM (Seabridge's massive FAT-type gold deposit in British
Columbia) comes out in March . . .” Before we get to
the punch line, let us disclose that one of Seabridge's
“insiders” is neighbour and friend
William M. Calhoun, a Seabridge director and one of
those annoying mining engineers. For more than a decade Wild Bill Calhoun
steered Day Mines through the chaotic waters of the 1970s and negotiated the
successful and very profitable merger of Day Mines with Hecla Mining Company. Calhoun has spent more time in more mining
districts than a tyro like Barron's Alpert has lived in years post-breast
weaning. And now pushing 80, Calhoun still gets his elk every autumn. (Question:
“Calhoun, where'd you get that fine elk?” Answer: “In the
woods, asshole.”) The Barron's
hatchet-job had its desired effect for the shorts, driving SA's stock down
from a pre-publication price of $30 down to $21. Citron strove to further
drive the nail. But a funny thing
happened on the way to the market. On 31st March, a
pre-feasibility report on the KSM gold property moved 30 million ounces of
gold from stated resources into the proven and probable reserve category. Let us meditate
upon the meaning of this, courtesy ounce again of Minyanville's Lance Lewis: 30 million ounces of gold amounts to a third of
Newmont's entire gold reserve base, and NEM's reserves are spread out over
multiple continents. Seabridge's reserves are all
in one place, and in mining-friendly Canada. We interviewed Newmont's boss
recently and he told us that they've downgraded their
“world-class” expectations from 5 million ounces to a quarter
million. And here's an outfit with 30 million ounces? Tell us Seabridge is not going to get taken out. This is one big sumbitch. There is a larger
evil at work here. Dow Jones, through its vassals in the Wall Street Journal
and Barron's, despises gold and hard currency. The bashing is incessant, and
seems almost conspiratorially focused on the explorers. Without paper and
fiat money circulating through the system to inflate the markets they cover,
Dow Jones has no market. They are chasing shadows, and the likes of Alpert
are their whores. And there is a
larger lesson. Every explorer (read: junior mining company) starts with a
“resource.” It can be a channel sample, or the discovery of an
outcrop, or a couple of promising holes. You step-out, you in-fill or, if you
are underground, you grind your diamond drills back to carbon, and you
guesstimate. Then you roll the big guns in, the geologists and scientists who
are Canadian National Instrument 43-101-qualified,
or you jump into the U.S. Securities and Exchange Commission's rat's nest,
and you convert those resources to reserves. Either way,
there's a government gun pointed to your head, and you'd better be
honest. A lot's at stake. What flat pisses
us off is that mining “journalists” are not held to the same high
standard as the geologists and the mining engineers are. Not that you need to
be a chicken to judge an omlette. But should
bashing, front-running and the like be a crime? Damn right. This probably
explains why more than one noted “mining journalist” moved to the
Caymans. Meantime, take
advantage of the greed and stupidity of publications like Barron's. If you
can't be with 'em, at least bet against this crock David
Bond Editor : The
Silver Valley Mining Journal
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