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Mail exchanging on Mercer Gold (MRGP.ob)

Reader ‘TK’ sent this mail into IKN Nerve Centre yesterday afternoon:

Here’s another laughable company for your humble corner of cyberspace. 

Mercer Gold   MRGP.OB 

20+ million market cap with an option on a property in Colombia that has 249 soil samples still awaiting results!!!!

But little did TK know that we’d already given a headsup on this stock. Here’s the reply sent back.


This from the subscription IKN Weekly issue 59, dated June 20th:

Mercer Gold (MRGP.ob): A Colombia short
As mentioned at some point on the blog last week, there are a small number of subscribers that are always on the lookout for an OTC mining short so here’s one that fits the bill. With a name change from “Uranium International Corp” to “Mercer Gold” (MRGP.ob) just finalized, this company has recently restructured debt, added new personnel and is looking to explore the recently acquired “Guayabales” gold concession in the Caldas province of Colombia.

The property is assumed to sit on strike from the Marmato mine recently taken over by Medoro Resources (MRS.v) just a few kilometres away and is currently operated on a small scale (around 50 tonnes per week) by artisanal miners working in co-operative. MRGP has 76.1m shares out (May 2010, after the recent company restructuring), no debt and around $2m in cash at treasury thanks to an April 2010 private placement at 50c that raised all the $2m currently held. According to this passage of the recent company 10-K, this is how the cash is due spent:

Based on our current plan of operations as set forth above, we estimate that we will require approximately $1,000,000 to pursue our plan of operations over the next twelve months if we complete Phase I only, but approximately $2,000,000 over the next twelve months if we also proceed to Phase II during that time frame. As at February 28, 2010, we had cash of $Nil and a working capital deficit of $1,107,660. Subsequent to year end, the company closed a private placement which raised $2,050,000 which will be utilized in the Phase I and II programs. However, we may require additional financing to pursue our plan of operations over the next twelve months. There can be no assurance that we will obtain any additional financing in the amounts required or on terms favorable to us. If we are unable to obtain additional financing, we may have to re-evaluate or abandon our business activities and revise our plan of operations. The Phase 1 exploration includes initial exploration, with Phase 2 evisaging a limited diamond drilling campaign on site.

The stock is open for promotion and will try to jump on the Colombia gold bandwagon, but the management team put together has an air of improvisation about it (new recruit James Stonehouse ran the local ops of the trainwreck known as Ascendant Copper/Copper Mesa, kicked out of Ecuador due to bad practices) and inquiries made by this author regarding the property have been met with comments such as “skinny veins…..ok for smalltime producing….will probably be good for a flashy NR headline….not a real mine”. So once the $2m is spent and the pumped-up headlines are shot, MRGP is 100% certain to be adding paper in return for extra cash before too long. The next six months will provide no great news and the drill campaign won’t see a result until 2011 minimum, which is a long time for junior pumpers to be holding their breath. Add in the already dubious style of promotional news releases (e.g. we get to hear that the company has received a 43-101 technical report on the property but we’re not allowed to see it ourselves) and that overriding “OTC smell” around the stock and it all points to a decent place to balance your port with a short. An obvious one, folks

We even mentioned it in a quick update in IKN70, last weekend. Just sayin’…..

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