Sanborn Resources Ltd (OTCBB:SANB) Slides Further Down

2SANB.pngSanborn Resources Ltd (OTCBB:SANB) dropped by a further 10% yesterday which means that the total amount erased over the last two sessions exceeds 20%. The closing bell came when the ticker was sitting at $0.454 per share which in turn means that SANB‘s market cap at this value stands at more than $18 million. We just had to ask ourselves: “What kind of enterprise will you get for that sort of money?”.

Well, you get a company that has never been involved in the mineral exploration business. Until April 17, they were working as retail sellers of works of art and they have even managed to register some revenues in the past few years out of this business. Apparently, they weren’t happy with the way things were going and they decided to change the plan altogether. They got in contact with another mining penny stock, Rae Wallace Mining, Co. (OTCMKTS:RAEW) and through SANB‘s wholly owned subsidiary Inti Holdings Limited (incorporated in the Cayman Islands), they purchased some mining rights in Peru. SANB say that the properties are extremely lucrative, but they have yet to prove that they can get the gold out of the ground and, more importantly, do it at a profit.

Quite frankly, we have our doubts about that. Remember the $18 million market cap? For that, rather steep price you get a company with a financial statement that looks like this:

  • cash: $21 thousand
  • current assets: $49 thousand
  • current liabilities: $173 thousand
  • quarterly revenue: $0
  • quarterly net loss: $57 thousand

For $18 million, you can also get a company that seems to have a virtual office as their official mailing address and a CEO quoted as “A Mining Industry Rockstar”. Who is saying such things for SANB‘s James Davidson? Well, it’s an article on a website called Financier Times and for the last couple of days some posters are also artificially raising the activity on Sanborn’s message boards by flooding them with their optimism.

Were they paid to do so? Of course. The aforementioned article has been online for a while and although currently it says “Published July 22”, you can see from this screenshot (made a while back) that it has been available for quite a bit longer. More importantly, when you get to the bottom of the page, you’ll find that this is not an ordinary article, but one that is specifically designed to entice you into buying some SANB shares. The people who wrote it are well paid, we must say. The total promotional budget amounts to no less than $3 million but did it work?

It did. Quite well in fact, but only for a little while. Its publishing possibly coincided with SANB‘s first run which was logged on July 5 when the ticker moved up by about 46% closing the session at $0.38. A couple of days later it was already at $0.60 but after a few sessions and some violent corrections, it was back where it started. Interest in the ticker was renewed and on July 22, it reached $0.58, but once again, it was quite short-lived and as we wrote in the first paragraph, SANB is heading back down.

1ARTH.pngIt’s the classic pumping curve as displayed by many other promoted penny stocks like Arch Therapeutics Inc (OTCBB:ARTH) and Xumanii, Inc. f/k/a Medora Corp (OTCMKTS:XUII) (who finally got their Caveat Emptor badge) and there really wasn’t anything to suggest that SANB will be different.

Especially when you have in mind that the “Mining Industry Rockstar” mentioned by the pumpers is such a controversial figure. We wrote in one of our first articles on SANB that there are quite a lot of negative opinions about him and the entities with which he’s been involved over the years, but we decided to sift through the information and see if there’s anything in particular that you should be worried about.

It turns out that, among other things, he is the co-founder of a company called Agora, Inc. (also known as Agora Publishing Inc.) which is an entity that controls a number of newsletters providing advice on all sorts of subjects like traveling and health. A large chunk of their portfolio however, consists of the financial newsletters through which they seem to be doing stock promotions. Unlike most of the pumpers Agora actually charge their subscribers for the supposedly invaluable information contained in the emails but this doesn’t mean that everything is perfectly okay. In fact, they did have some serious trouble with the SEC a while ago and if you check out this document, you’ll see that the allegations are quite substantial. Mr. Davidson’s name is not mentioned in the case itself, but we still reckon that such facts are definitely a cause for concern.

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