Small Cap Updates & New Recommendations – August 30, 2014

This week we have an exciting update on Goldsource Mines (GXS) and financing news about Ironclad Performance Wear (ICPW) and Global Minerals (CTG).

Goldsource Mines (GXS – $0.255) was granted a Medium Scale Mining Permit by the Guyana Geology and Mines Commission for its Eagle Mountain gold deposit in Guyana. The permit grants permission to mine gold, diamonds, precious metals and precious minerals within a 250 hectare portion of its 5,050 hectare Eagle Mountain prospecting license. The project is now fully permitted for mining activities and ready for construction financing and subsequent Phase One development.

Mining Permit

Because a medium scale mining permit is required under Guyana law to be held by a Guyanese national, Goldsource entered into an agreement with Kilroy Mining Inc, a private arm’s length Guyanese company.

This makes Kilroy the actual holder of the permit, but Goldsource will obviously conduct all mining operations on the property and will also fund all expenditures. In return, Kilroy will receive 250,000 common shares of Goldsource and a 2% net smelter return royalty on all precious metals found on the 250 hectares portion.

Excellent PEA

A few weeks ago, Goldsource published an excellent Preliminary Economic Assessment (PEA) for Eagle Mountain.

In order to minimize initial capital and project risk, the Company applied a phased-approach business model in which the easy accessible near-surface soft weathered rock (gold mineralized saprolite) will be mined first.

This conceptual approach encompasses four phases over four years. Phase I mining rates would be 1,000 tonnes per day (one 12-hour shift, 7-days per week) in year one. Upon successful completion of Phase I, the Company plans to systematically install and operate three additional similar plants over a four-year schedule with a cumulative rate of 3,500 to 4,000 tpd. The additional processing plants will be paid for through operating cash flow.


Goldsource is currently raising the necessary money to commence construction of the Eagle Mountain mine. In the PEA, phase I, pre-production capital costs were calculated at $5.9 million, which is a relatively small amount to commence mining. As such, we have faith that the Company will be able to raise the necessary money to proceed with its plans. Goldsource remains a core holding in our portfolio.

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Several officers and directors of Ironclad Performance Wear (ICPW – $0.35), the manufacturer of high-performance task-specific performance work gloves, purchased Ironclad common stock in a private placement. The Company sold an aggregate of 2,124,691 shares of common stock at a price of $0.2871 per share for aggregate gross proceeds of approximately $610,000.

While not required, the offering price per share reflected a 10% premium to the trailing ten-day average closing price of the Company’s common stock as of the date of sale, and each participant entered into a lock up agreement prohibiting the sale of the shares for a period of one year.

The private placement was effected because officers and directors of Ironclad only have a short trading window in which they can purchase shares. And since the daily trading volume of ICPW is fairly limited, it’s sometimes difficult to purchase significant amounts of Ironclad shares. So the one-time private placement provided Ironclad’s officers and directors a very efficient way to invest in their company.


Is there a better way to show confidence in the future of your company than to buy shares of it at a premium price?

Ironclad is working very hard at a turnaround. We still have to see the first actual results from that process, but investors certainly have faith in the Company’s management as the stock price has gone up about 70% in the past 30 days.

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Also Global Minerals (CTG – $0.20), the Canadian mineral exploration Company focused on recommencing mining operations at its 100% owned Strieborná silver/copper/antimony deposit in Slovakia, raised $730,000 through a non-brokered private placement in which it issued 3,650,000 units at a price of $0.20 per unit. Also in this case insiders participated in the financing, as they purchased 2,525,000 units for proceeds of $505,000.

Each unit will be comprised of one common share and one-half of one share purchase warrant. Each whole warrant is exercisable to purchase one common share at a price of $0.28 per share for a period of two years expiring August 26, 2016.

Proceeds from this financing will be used to further the development of the Strieborná project and for general working capital. The next important step is to complete the PEA, which will give investors a detailed picture of what Strieborná may look like as a mine.

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