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KMW Blog Jun 27, 2016: Episode #2 - Searching for Rescue Candidates among Zombie Juniors starting with Letter F


Posted: Jun 27, 2016JK: Episode #2 - Searching for Rescue Candidates among Zombie Juniors starting with Letter F
Published: Jun 27, 2016ABR: Zombie Search and Rescue Mission #2: The mission to find Zombie Stocks that can come back to life continues

The Zombie Search and Rescue Mission is a collaboration between Allan Barry Laboucan of AllanBarryReports and John Kaiser of Kaiser Research Online where the goal is to demonstrate the research of distressed juniors by using the KRO Search Engine and other KRO features to search for "zombie" companies and check them out in order to make a "yes", "maybe" or "no" decision as to whether or not the junior deserves to be rescued from the Zombie Wasteland. For more background see KMW Blog: ZSRM Episode #1.

Where Allan and John are unanimous about a yes or no, that company will be tagged as a Zombie Rescue Target - Yes or Zombie Rescue Target - No. The rest will be tagged as Zombie Rescue Target - Maybe. The 3 zombie categories are available as Special Parameter criteria in the KRO Search Engine (the 3 links above are direct links). The table below does not tell you what the judgment was, but it does take you directly to each zombie's segment. Those who are full KRO members are urged to check the links above to see which zombies ended up where, and use the table below to find the segment where that zombie is discussed. (First Time Registrations or Returning Members.)

Video URL Links
Prior Zombie Rescue Updates: Thor Explorations Ltd (THX-V)5:17
Episode #2 Zombies:Falcon Gold Corp (FG-V)10:00

Fieldex Exploration Inc (FLX-V)17:20

Finlay Minerals Ltd (FYL-V)22:30

Firebird Resources Inc (FIX-V)30:16

Firesteel Resources Inc (FTR-V)39:30

Firestone Ventures Inc (FV-V)50:23

First Idaho Resources Inc (FI-V)58:46

First Mexican Gold Corp (FMG-V)1:01:08

First Point Minerals Corp (FPX-T)1:04:23

Fjordland Explorations Inc (FEX-V)1:18:00

Freeport Resources Inc (FRI-V)1:28:26

Full Metal Minerals Ltd (FMM-V)1:35:10

The Zombie Search criteria consist of "listed and trading companies," and "only resource companies" in the Special Parameters box, "less than $0.10" in the Price Range box, "negative $1,000,000 to positive $199,000" ranges in the Working Capital box, and all the Project Priority boxes unchecked (the companies with no projects will otherwise not show up). The $0-$199,000 working capital range is included in the zombie definition because that is barely enough money to stay alive for another year, and in many cases the true working capital is negative because current assets include non-cash equivalents such as "receivables" that will never be received or "marketable securities" that have no bid. For this search to work one must be logged on as an active KRO member. If the search does not deliver too many hits, clicking "all pages" after the first group displays will display the entire list.

Episode #2 investigates zombies beginning with the letter F which yielded 12 zombies as of June 27, 2016. Three juniors were tagged as yes, five as no and four as maybe. Episode #2 is almost two hours long because John and Allan waste a fair bit of time trying to make sense of companies who do a really bad job of explaining what they are all about or trying to do to fix their zombie status. But they also wander off on tangents involving general interest topics triggered by stuff they see while looking at the profiles, people trees, web sites and news releases. What has become apparent to John and Allan after two episodes is how truly difficult it is to recover the back-story of once well-funded juniors that crashed and burned. This history is very important to understanding the "mood" of the remaining shareholder base, and the willingness of current management to "redeem" the junior. Once John and Allan decide on an alphabet letter for an episode, John simply makes sure the KRO profile for the zombies that show up is reasonably up to date. Management is not interviewed ahead of a ZSRM episode because the purpose of the ZSRM is to demonstrate how investors can start filtering using tools like the KRO Search Engine to discard junk.

The 90:10 rule applies to resource junior research in the sense that you can get rid of as duds 90% of the possibilites in 10% of your research time, but expect to spend 90% of your time budget reducing the remaining 10% to the 1% you want to support or buy. Interviewing management to understand the past, present and future requires one to first research the history of a junior and understand its current circumstances. If you cannot quickly establish to management that you have knowledge of the zombie junior's history, all that will be sent your way is mint-laced garlic breath. That assumes you can even get a conversation going. Very often that requires management to believe that you are stupid and nevertheless have a lot of money, or are stupid and somehow still have influence over other people's money. All interactions with resource juniors should be understood in the context of predator-prey system with clarity as to who is which often lacking. It is always wise to assume one is the prey.

Over the decades John and Allan have witnessed management teams who agonized as their junior story crashed and burned, while others just shrugged it off as the natural outcome of a mindset whose prime objective is the concentration of the wealth of the many into the pockets of the few. This is a loathsome aspect of the resource junior game, though by no means a universal. The current incarnation of Full Metal Minerals Ltd seems to be a very cynical manifestation of this lamentable mindset. In the Full Metal segment John refers to a KMW Blog he wrote in reference to an interview with BNN's Andrew Bell about the zombie plague where he discusses how zombies can be turned into free paper manufacturing machines (Apr 29, 2016: Andrew Bell seeks perspective from John Kaiser on the TSXV Zombie Plague).

But there is a Jekyll & Hyde aspect to the junior game. Full Metal's Michael Williams and Cale Moodie are pulling modest compensation out of their current primary focus, Vendetta Mining Corp, which has a zinc project in Australia called Pegmont. Vendetta still shows up in the Zombie Search, but the junior in May 2016 bit the dilution bullet and raised $2.5 million through a private placement of 50 million units at $0.05 (full $0.10 two year warrant) sprayed among 86 placees that included insiders at less than $100,000 chunks. RCF and Solitario, neither of them stupid entities, are backers. Insiders who look like greedy pigs in the case of Full Metal have sacrificed a good chunk of their upside in the case Vendetta to push their fundamentals based dream toward reality. Sometimes things are black and white in the resource junior game, but often they alternate to produce a perplexing shade of gray. Most often when you encounter the pure white, you discover that the funding needed to deliver the fundamentals stays away. A revolution is needed to smash apart this perverse obstruction to unleashing the geological creativity of resource junior teams that want to deliver a fundamental success, not just a story enabling backers to blow off their paper. John Kaiser is now involved in a startup called OVS that will deliver this revolution. For a sneak preview check out the Uravan - Outer Ring Outcome Visualization and the Nevada Expl Inc - Kelly Basin Outcome Visualization, both juniors whose innovation based stories have been over-looked by the street.

 
 

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