LSTG – Gold IPO Alert – 80 Cents and Worth Billions??

Posted by Admin on August 14, 2011 under Penny Stock Alerts Blog | Read the First Comment

Hello and Happy Sunday to you!

Today is quite a joyous occasion, as I have a hot stock pick that I’m confident will bring a smile to each and every one of you.  I am well aware that most of your mouths are brimming with shiny gold teeth, so congratulations…that beautiful smile of yours is getting more valuable every day.  :)

I may like to joke around, but I’m dead serious when I say this alert is as good as alerts get…and that’s no BS.

This gold company just acquired a 70% interest in a Project that is estimated to contain reserves of many billions of dollars worth of gold and silver, yet they’re only priced at 80 cents.  Possibly not for long…because tomorrow is like “IPO Day” baby!!

First, if I may mention something just slightly off-topic…

The mainstream financial media gives a depressingly minuscule amount of attention to small-cap companies, but I ran across a video on Yahoo discussing how historically small-caps get beat up more on the way down in a bear market, but typically outperform on the way up as the market recovers.  It’s not the most interesting video in the world but it’s nice to see the mainstream financial media discussing smaller companies, especially seeing as they actually acknowledged their advantages over large caps in recovering from a down market.

http://finance.yahoo.com/blogs/breakout/small-caps-bear-market-buy-beware-135726875.html

Not surprisingly the very next video that pops up features Jay Feuerstein, Chief Executive Officer and Chief Investment Officer of 2100 Xenon (a prominent futures management investment group) saying he wouldn’t be surprised to see gold hit at LEAST $2,500 per ounce.

Well the market has just been beaten up, and my new alert is all about gold.   I was pleased to see one of my main finance sites, Yahoo Finance, actually giving me the perfect way to introduce my brand new pick.

Today’s alert is….LSTG – Lone Star Gold Incorporated.

ABOUT LONE STAR: Lone Star Gold Inc. is a publicly traded gold exploration and development company based in Albuquerque, New Mexico. The Company’s aggressive acquisition and exploration approach is strategically focused on proven, stable precious metal regions in America and Mexico. Lone Star’s La Candelaria gold-silver project comprises ~ 1,976 acres (~ 800 hectares) of mining concessions located roughly 125 miles (200 km) southwest of the capital city of Chihuahua State, Mexico. Geological characteristics in the surrounding area indicate potential for gold and silver mining. In 2009, a geological survey and report* on the property found gold samples grading as high as 0.35 grams/ton (g/t), and silver samples grading as high as 89 g/t. The report estimated La Candelaria’s potential reserves as 10,312,898 ounces gold at an average grade of 0.20 g/t, and 215,697,280 ounces silver at an average grade of 40 g/t. Based on the 2009 report’s reserve estimates, the La Candelaria project represents a combined potential valuation of ~ $22.68B.** The property is accessed via established roadways, and the nearby town of Tonachi includes an airstrip and telecommunication services.

The past few years, and especially days, you’ve heard me go on and on about gold and how hot it is. But gold is not just a flash in the pan…gold has been a rock for years.

Just take a look at this chart that compares the performance of the Dow versus gold.

http://www.marketwatch.com/investing/future/gold

Click the pull-down “compare” button and you can see how gold has crushed every equity market in every time frame from five days all the way up to five years.

While the gold naysayers have little to show for holding onto their stock in the long term, gold investors have enjoyed huge profits for years. “Experts” have been telling us that gold is overvalued at $750, 1000, 1500, and now near $1800.

That may seem like a dizzying high, but there’s still a lot of room to run. Its all-time inflation adjusted high is still more than 30% away!

With the markets getting hammered over the past few weeks, and really smashed last week, gold started to breakout to new highs.  However, an unexpected dramatic 22% increase in margin requirements literally forced gold traders to decrease their positions.  This seems to have caused a brief pause in gold’s large and consistent gains.

I sincerely believe this is causing a huge amount of investors to look for gold-related investing opportunities, including myself personally.  Gold’s rise seems unstoppable for the short-term, and possibly even longer.  There are a LOT of traders out there just waiting for a tiny pullback so they can jump on board.  This may create extra buying volume for gold equities next week!

Plus, just as the lovely ladies in the Yahoo video link said…small companies outperform large caps after the market has been beaten up…and it certainly has been beaten up.  This could cause smart investors who are aware of this fact, to also go on the hunt for some OTC companies to buy up.  In the current market, it would make sense that their primary targets would be gold companies.  This could also bring in extra buying volume an activity to small gold companies specifically.

The last thing that sets the stage perfectly for LSTG is that the one of the only things that have performed well lately (besides gold) and still manages to get investors hyped up…are IPOs.  IPO are three letters that always get traders blood boiling. In a market that’s starved for fast moving easy money, IPOs are one of the few bright spots.

That’s right, this is a brand new gold stock.

Investors may develop an increased interest in small companies after this latest market beating.  Gold is the first thing on everyone’s mind.  IPOs cause rampant excitement, all out mania, and often huge quick profits.  LSTG embodies ALL of these things!

Now you see why I was so excited about this one when I sent my preview email on Friday.  When I went on my search for the best OTC way to play the current gold situation, I never dreamed I’d find an unbelievable gold-IPO combo!

Especially not one that seems to be ridiculously underpriced for the amount of revenue potential it has, and given that it’s in the hottest business in the world.  I’ll get to that revenue potential in just a second.

Let me clarify, LSTG is NOT an actual IPO.  It’s a situation that’s similar in certain ways.  LSTG is a company with a $92 Million market valuation that has not yet begun actively trading, and has only begun releasing news this month.  In fact, LSTG just launched their official corporate website exactly 2 weeks ago.

If my prediction is correct, tomorrow will be LSTG’s first ever day of active trading!

WE are the first group to become aware of LSTG. I think with their awesome potential, their market valuation should easily exceed $100 million very soon.  In this market where anything gold is worshiped more than in the days of the Mayans, a $100 million market-cap IPO-style situation is not going to go unnoticed.

I believe MANY other newsletters and media outlets will begin to cover and alert LSTG in the near future!

As investing guru Charles Barkley says, “I may be wrong, but I doubt it.”

So what are the nuts and bolts of LSTG?

Lone Star Gold is an exploration stage company that engages in the acquisition, exploration, and development of gold and other precious metal properties in Mexico and the United States. It holds a 70% interest in the La Candelaria gold-silver project, which comprises 1,976 acres of mining concessions located to the southwest of the capital city of Chihuahua state, Mexico.

Mexico is known for a vast wealth of precious metals. Mexico produced 60 metric tons of gold in 2010, an increase of nearly 18% from 2009. It also produced over 3,500 metric tons of silver, second in the world. That’s a lot of sombreros.  With the soaring prices of gold and silver, Mexico has become one of the world’s top destinations for the exploration of these natural resources.

That’s good to know about Mexico in general, but how much can the La Candelaria project actually yield for LSTG?

Based on a geologist survey, this project is estimated to have 10.3 Million ounces of gold and 215.7 Million ounces of silver!

These numbers are conservative. Samples of gold were graded as high at .35 g/ton and silver as high as 89 g/ton. Luis Olvera, Engineering Geologist, had previously estimated that the average grade for gold would be .2 g/ton and silver at 40g/ton.

In other words, a geologist survey showed LSTG’s La Candelaria Property exceeded expectations for the grade of its gold by 75%!  Silver grade exceeded expectations by a mind-boggling 122.5%!!

I believe the upside surprise for LSTG’s stock could be even larger than that.

If these numbers don’t blow you away, your feet must be super-glued to the floor…

Ready?

Lonestargold.com states, as I just mentioned, the La Candelaria Project represents estimated reserves of 10.3 MILLION ounces of gold and 215.7 million ounces of silver.  The site lists the potential value as $22.68 BILLION!  That’s with gold being valued at less than $1500 an ounce.

If you do the math with an up to date value for gold and silver, the total value of LSTG’s La Candelaria project is projected to be OVER $26 BILLION!!!

Lone Star Gold, owner of 70% of this project, could potentially net many BILLIONS in revenue.  That’s unheard of for a company somehow listed at only 80 cents.

LSTG has their project in a very hot area, where well-known big board companies are seeking gold as well.  Usually if the biggest and best names in an industry are exploring a certain region, you can bet it’s a prime location.  These gold companies have projects in the exact same Mexican State as LSTG’s La Candelaria Project.

1.      Gammon Gold (1.4 billion market valuation)

2.      Silver Standard (2.7 billion market valuation)

3.      Coeur d’ Alene Mines (2.9 billion market valuation)

4.      Goldcorp (43 billion market valuation)

Take a look at the map (on page 2) of mining companies surrounding La Candelaria project:

http://www.lonestargold.com/pdf/LSG_factsheet.pdf

You can see LSTG’s project is located closest to Goldcorp (GG – trading at about $50), the biggest daddy of them all.

At first glance, one would assume Lone Star Gold must be a huge company…but we’re talking about a company that’s current market valuation is under $100 million.

How can this be?

Because LSTG is JUST hitting the market.  This is not an old mine that a gold company has been mining for several unfruitful years. Lone Star Gold literally just signed the rights to mine this project on August 11!  They just launched their website August 1st.  If my guess is correct, LSTG will have a very active day tomorrow…in essence making tomorrow like LSTG’s IPO day.

IPOs are great.  In bull markets, IPOs run wild and  happy eager investors eat them up causing enormous and fast gains.  Yet in bear markets, IPOs can remain one of the few bright spots and often can still be met by amazing performances you would assume are reserved for bull markets.

There may be a reason for that…

Once again I watched an entire episode of Mad Money on Friday.  Cramer was discussing IPOs and had an interesting point.  When the market takes a down turn, investors often debate switching to safer companies…like “recession-proof” companies, large companies that pay dividends, etc.  This doesn’t really hurt the Goldman Sachs, the Morgan Stanleys, the JP Morgans of the world.  However if a market downturn is bad enough, investors frequently decide to do the unthinkable and pull their money off the table…walk away from the market completely!

Now that hits the big financial institutions right where it hurts.  There isn’t too much they can do about it, but Mr. Jim Cramer had a fantastic point.  There is one thing they can do to get investors excited again.  They can throw them a bone.  A bone in the form of an underpriced IPO.  LinkedIn is a great recent example.  It was majorly underpriced, causing a run from $45 to $120 on IPO day.

Investors hear that and all of a sudden feel like idiots for missing out.  Cramer tells them, “You’ve gotta stay in the game!”

And Lloyd Blankfein is there to give them a high five, pat on the butt, and a nice “Welcome back to the casino.”

I think LSTG may be one of those once in a blue moon “bones” the market is throwing us.

Take a look at the press release from last Thursday:

http://finance.yahoo.com/news/Lone-Star-Gold-Inc-Acquires-iw-3809175735.html?x=0&.v=1

Lone Star’s president, Daniel Ferris: “Our goal is to bring the Company into production in the near term and separate us from the scads of exploration companies in the area. To do so, we’ll simply utilize the knowledge and experience of our partners in conjunction with that of our own internal team. And since it’s well documented that only 10% to 15% of the calderas in this area of the Sierra Madres have been located and defined, we’re excited by the significant upside potential when it comes to resource discoveries to be made.”

Presidents of companies like to see their share prices rise so I tend not to trust what they say all that much, but they do have things to worry about like their long term credibility so there is some value in listening to what they have to say.

They like to sound very confident but vague about things like exploration turning into production.  I can’t help but be impressed by how the very first sentence he said was that his near term goal is to bring the company to real PRODUCTION, and specifically to pull ahead and separate LSTG from the herd of exploration companies in their area by truly producing instead of just exploring.

It’s a bold statement, and with LSTG being a gold company in an IPO-like phase, I think investors are going to go completely bananas for LSTG.

Currently the price of Lone Star Gold is 80 cents. If LSTG were to explode and reach the price of Gammon Gold, a company that mines around the La Candelaria project, then LSTG could reach $11 dollars! That’s a 1275% gain!

Now am I expecting that to happen?  Of course not.  But if LSTG actually does achieve production on this project, with many $$BILLIONS  in estimated gold and silver reserves, their current 80 cent share price could become a distant memory.

The bottom line is that LSTG has a trading setup and story that is in 100% PERFECT sync with what the market wants at this exact moment. Not to mention revenue potential that is so out of whack with its share price, that investors could send LSTG on an incredible run in the immediate term.

LSTG’s entry into the public market and anticipated commencing of active trading couldn’t possibly have been timed any better!

Even though I’m feeling extremely confident about LSTG, the recent market has been unpredictable so of course do not forget to trade with caution and a tight stop, book profits, etc.  You still never know what can happen!

Anything can be happen in this wild market so I don’t want to over-hype anything, but alerts like LSTG don’t come around too often.  I haven’t discovered a play that looked as attractive as this hot penny stock in months.

LSTG is a perfect storm.  I set out to find a hot gold play, confident I would find something really good.  I never dreamed I’d find a gold company priced at 80 cents that could be sitting on a 70% interest of up to 26 billion dollars of gold and silver. Especially at a time when gold is the hottest commodity in the world and investors have already dug under every rock and bid up the price of every gold company.

I think the only reason this is possible is that the company hasn’t started trading yet and is completely undiscovered.  The fact that in my opinion it’s practically an IPO makes this one too good to resist.

I absolutely think LSTG has what it takes to be MORE than just a one day play!  If LSTG enters production of significant quantities of gold and silver, this could become a true long term homerun.

I believe LSTG is about to be the newest hot company that everyone will be talking about.  You’re finding out about it first right here.

Thousands of investors are finding out about this possibly undervalued and perfectly untouched little gem this weekend, so tomorrow could heat up IPO style!

All I ask is don’t forget who told you about LSTG first.

Talk to you tomorrow,

PSA – Penny Psycho

www.pennystockalerts.com