A closer look at the poker flats

I wrote a entry a little while back about the potential TIMCO financing for Spartan Gold (SPAG), which has an option of earning 75% (from Mexivada Gold, MNV) on the poker flats property. To me the poker flats is interesting because it borders on Gold Standard Ventures property, where they have been releasing very respectable drill results.

SPAG doesn't trade on any of the Canadian exchanges and is only on the OTC boards, which I nearly never venture over to. But, a company called Sphere Resources (SPH.H), who owns roughly 53% of SPAG is traded on the NEX board of the TSX venture. For those who are not aware, the NEX board is a place for companies who are either conducting very low levels of business or none at all.

As I said, the poker flats is of interest to me. I see it as a high risk/high reward property and have thrown a small amount of money at it. Investing in the poker flats is not as simple as it could be. Spartan Gold can earn 75% of the poker flats from MNV if it conducts drilling on the property, SPH owns half of Spartan Gold, and MNV owns the poker flat but has optioned it out to SPAG.

I ended up investing is SPH for a number of reasons. First, I don't like going to OTC board, and looking at the historical quotes for SPAG and cross referencing them with their press releases I suspected the usual games that go on in the OTC markets. I looked at MNV, but felt they have been poorly managed. They already did a share consolidation and are proposing another one. I don't want to buy a 3 cent stock, have it go up to 9 cents on a 3:1 rollback, then have it drop back down to 6 or 5 cents. One could wait for the rollback to finish, but then, your investing I'd be investing in a company that owns 25% of the poker flats.

Sphere currently owns 53% of Spartan. If the financing goes through, and the warrants were to become exercised, Sphere would own roughly 30% of SPAG. As well, with Sphere being listed on the NEX board, they have major restrictions with regards to share issuance and many other share related processes. Being in at 3 cents, the stock doesn't seem to move a lot, to me its a way to invest some money in the poker flats through a Canadian exchange and not having to go over to the OTC. I'm betting on the hopes that any NR mentioning the finding of gold will send the price up around .10 - .15, which is where I would look at exiting. Do your own DD, I'm just sharing thoughts, not giving advice.

The terms of the financing from TIMCO will require SPAG to renegotiate the terms of their joint venture agreement. This is a clause I found to be interesting as I wonder what exactly they would want to change, and if this could be any potential hang up in the deal. I would guess that MNV will be eager to have the 3000m drill program commence on the poker flats, given the fairly poor results they received on their own 1500m program and their running out of money.