The stock market is an interesting thing. When a gold exploration company that has less than $5M in market cap announces that they have Intersected 149.5 Metres Grading 3.21 g/t of Gold on their Northern Ontario property, usually that's the final opportunity for anyone to buy in at such a low market cap. This is particularly the case if the company does a large financing at favourable prices that secures its cash needs for years to come. But that's not the case for GTA Resources and Mining Inc. (TSXV:GTA).
On February 14th, 2012, GTA announced their huge gold discovery on the Northshore property in Ontario, of which the company can earn up to a 70% interest. The news shot the stock price up an incredible 529% in one day from 24.5 cents to $1.54, touching as high as $2 on the day. The news was not only well-received by daytraders on the TSX Venture Exchange, but by large institutional investors as a week later on February 21, the company managed to obtain $5M in a private placement, half of that in the form of common shares at 90 cents and the other half from flow-through common shares at $1.20. The company originally sought $4M but increased the amount of the private placement due to high demand.
The end result is a company with two highly prospective gold properties in Northern Ontario that is well-funded for drill programs with nearly $4.5M is working capital. Phase 3 of the drill program on Northshore has been completed, consisting of 15 holes, totaling 4,766 meters. The first seven holes of this program have been reported with the other eight expected to be reported shortly.
Despite the incredible hit in February, the private placement that took place at $0.90 and $1.20 and the drill results still outstanding, GTA has sunk from its $2 high to as low as 14 cents and sits in the high teens thanks to tax-loss selling, general bearish sentiment on the exploration industry and results that did not match the 149.5M of 3.21 g/t gold on the reported first seven holes of Phase 3. The stock price is actually lower than it was before the huge discovery and excellent cash position created by the private placement and the company essentially has the same market cap prior to February 14 as the lower share price offsets the slight increase in share count.
That's ok for new potential investors, because this presents itself an unprecedented opportunity for people to get a FREE second chance at a five to ten bagger stock. Free because at 17.5 cents with 25.4M shares outstanding, the stock's market cap sits just under $4.5M, exactly the amount of working capital held by the company as of September 30, 2012 according to their latest SEDAR documents. Because the stock already sits at cash value, the speculative value of the final eight drill holes to be reported is nil, meaning there's nowhere to go but up once they get announced. And if they are anything like the 149.5M of 3.21 g/t gold already seen on the property, expect that five to ten bagger potential to be realized as a second hole of this nature would confirm the resource and viability of Northshore.
In addition to the Northshore property, the company owns 100% of the Auden Property in Northern Ontario. The property has a history of encouraging gold mineralization according to past drilling and is situated in a geological structure similar to major gold deposits Northern Ontario and Quebec such as the Destor-Porcupine Fault in the Timmins-Matheson area, the Cadillac-Larder Break, and the Casa Berardi Break. In addition, the geology of the area suggests a strong presence of Platinum, Copper and Nickle on the property. Exploration is set to begin on this property in 2013. As the current market cap sits at the company's working capital, this property, along with the Northshore interest that was responsible for the 529% spike on February 14th, are both thrown in for free for any investor who buys in at these prices.