Somewhat off topic, but ole 49r, what do you think of these desert dirts. At least it shows that SI is a well respected source.
'Desert dirts' big leap of faith for investors
Miners expect to find huge gold, platinum deposits in deserts of southwestern U.S.
Bloomberg
The Calgary Herald
ew Green is familiar with all-or-nothing ventures. As a Hollywood screenwriter, he can earn six figures one year, nothing the next.
So it's natural he's attracted to International Precious Metals Corp., a Canadian mining company that promises to unlock huge gold and platinum deposits in the Arizona desert.
"They may be full of it, but they also may be right," said Green, whose last screenplay, the 1995 thriller Never Talk to Strangers, starred Rebecca DeMornay and Antonio Banderas.
Green bought his first batch of the company's stock about a year ago, when it was trading between $4 and $5 US -- it's now at about $7 -- and bought more earlier this year. He declined to reveal the size of his holdings.
Mining analysts and geologists scoff at the notion of gold in the desert, which only seems to make Green and other small investors more determined.
IPM is one of a handful of Canadian and U.S. mining companies trying to ignite a gold rush in the southwestern U.S. Known to investors as "desert dirt plays" or simply "desert dirts," companies such as Naxos Resources Ltd., Maxam Gold Corp. and Global Platinum and Gold have attracted a loyal following of investors such as Green, as well as staunch detractors.
The stocks suffered during the last two months when Bre-X Minerals Ltd. and Delgratia Mining Corp. shares collapsed on revelations of test result tampering. Both companies had claimed huge gold finds.
IPM's shares, for example, which climbed to a high of $111U4 in March, have been trading between $6 and $7 in recent days.
IPM officials bristle at the desert dirt label, saying their company stands out from the others because it's better managed and better financed. It has pumped $12 million into its Arizona project in the last four years, spokesman Eli Constantine said.
"Our company is run by scientists and professionals," he said.
IPM also has attracted institutional investors such as Capital Group Cos. of Los Angeles, a rarity in the group.
Capital owns 2.14 million shares, or about 12 per cent of IPM's outstanding stock. Portfolio manager Terry Burkemeier said the company doesn't comment on its investments.
Mining plays have lured investors since the days of pack mules and pickaxes, offering the prospect of huge wealth to those who buy in early.
The desert dirts add a technological twist, using their web sites on the Internet to communicate directly with investors. In addition, they say they have new testing or extraction methods, such as using chemicals to leach the metals from the soil, that can tap deposits in areas passed over by previous prospectors. The intricacies of the testing methods are debated daily among investors on Internet bulletin boards such as Silicon Investor.
None of the companies has produced gold in the desert. Some have promising test results backed by respected labs, while others have little more than promises posted on their World Wide Web sites.
Several companies say they found other metals such as platinum, although geologists at state mining bureaus throughout the U.S. Southwest say such metals have never been found in the area.
Even investors agree that buying stock in desert dirts requires a leap of faith.
"It's speculative, like any small-cap, high-growth stock," Green said.
Ralph Aldis, a portfolio manager for United Services Advisors in San Antonio, which manages about $500 million in gold, precious metals and natural resources investments, said he hasn't seen any mining activity in the southwestern U.S. he considers credible. |
