Ah...once again Sphere and Mexivada at the Same Old Game

I've written on Sphere resources a number of times now; in fact it is getting quite embarrassing that I would spend so much time talking about it. But...I like to point things out.

Remember when I called Mexivada a "real estate company"? Meaning that they basically option out moose pastures for the 10-40k cash that comes along with the option agreements, and any free shares they (Redfern) might be able to sell on the market. Well, they have done it again.

The Poker Flats is a property they have been screaming about for years now. It is adjacent to Gold Standard Ventures Railroad property where in the past they have hit some very nice grades. The border of the poker flats is actually about 75 meters from where where a series of promising holes were drilled by GSV, leading Mexivada/Sphere to believe that they could, or at least talk like they could, have drill few decent holes themselves.

Now...one would think that if they were actually serious about it, if they really thought they had a discovery, they would raise the cash to drill 3200 meters, but no, in over 4 years they have done only a aerial magnetic scan and nothing else.

Well, the option agreement ran out, I actually just wrote about it a week or so ago; the post where I pointed out that Sphere publicly stated they had earned in on their initial 51% interest, and then retracting the statement by saying they had renegotiated the option agreement.

So, lets begin with the stupidity:

Mexivadas Sept 8th news release regarding the newly negotiated terms of the option agreement.

"Optionee can earn a 51% interest in Poker Flats (the "Property") by compensating Mexivada and underlying lessor in 1) a payment of$10,000 in cash on signing to Lessor(paid), 2) Payment of $10,000 to Mexivada on or before October 31, 2014, and 3) issue to Mexivada Mining Corp. 750,000 common shares of Sphere Resources Inc. to Mexivada within 60 days of its earning a 51 percent interest in the property and 750,000 common shares of Sphere Resources Inc. within 60 days of the Optionee acquiring a 75% interest in the Property"

 So, they have renegotiated the terms on a property that, while holding such "promise", has seen no work done to it at all in 4 years? You would think that they would prefer to actually explore the property themselves, given Spheres current track record of actually doing exploration work.

But no, the $20,000 cash and the 1.5 million of 0.005 cent shares is preferred.

Interesting, because here is Mexivadas Dec 22nd 2010 release which states the original terms of the option agreement 4 years ago.

 "Optionee can earn an 51% interest in Poker Flats (the "Property") by compensating Mexivada in 1) a payment of $25,000 in cash on signing (paid), and 2) issue to Mexivada a) 200,000 common shares of Sphere within 60 days of the Effective Date of December 20, 2010, and b) investing a sum of $500,000 into the property in exploration and development expenditures (inclusive of assessment work) over a 36 month period from the Effective Date. Optionee must issue 300,000 common shares of Sphere Resources Inc. to Mexivada within 60 days of its earning a 51 percent interest in the property."

So, I reiterate, no interest at all at in conducting exploration on this property. Redfern from Mexivada is happy with the cash payments (which have totaled $40,000 so far) from the option agreement and the cheap paper he can sell. Sphere is happy to be able to continually tout the Poker Flats property to retails investors, hoping to raise some cash for "management fees" and sell their free paper as well.

To further make my point, lets take a look at some of Spheres press releases. One will notice that these PR are purely IR hype rather than the release of any material information. Lets begin with 2013...

-September 04 2013: Sphere resources confirms strategy and updates efforts to identify existing gold and silver resources in Nevada. If you find yourself asking what this actually means, you are not alone. I would recommend reading the press release as it is quite hilarious. GSV had put out some decent results that day so Sphere used it as an opportunity to use a publicly dessiminated news release as an IR move. Seriously..read it, it sounds like a bad junior PR move, which it is. You will find that no material information is announced.

-September 23 2013 : Sphere Resources Has Engaged a Senior Geophysicals Consultant to Initiat a CSMAT On Its Poker Flats Property. Of course, engaging doesn't really mean a whole lot, nice choice of words. And did this scan ever happen? No.

-September 19 2013 : Sphere Resources on its Poker Flats Property Adjacent to Gold Standard Ventures Railroad Property. Another news release put out the same day as GSV releases exploration results on their Railroad property. Again, no material info is being disseminated.

- October 2 2013 : Sphere Resources on Its Poker Flats Property Adjacent to Gold Standard Ventures Railroad Property. Yes...same release following another GSV drill results release. Not that I need to say it, but no material info.

-October 23 2013 : Sphere Resources Outlines Specifics On Its Phase 1 Drill Program On Poker Flats Nevada. Here they outline nearly $500,000 in projected exploration costs, of course, they still have no money with which to conduct said "outlined specifics", although it does mention something about their "new york advisers" and their $10,000,000 bond financing (Another funny news release which can be read Here )

- September 18 2014 - Sphere Resources Outlines Financing Approach and Phase 1 Drill Program at Poker Flats: Still outlining financing and drill programs a year later. Not a single whole drilled...


There are more releases to this effect, and some starting before 2013, but for the sake of brevity I chose only enough to make my point, which I think can be clearly seen.


To give further evidence to my claim that Mexivada is a "real estate company" lets take a look at some releases from Mexivada regarding their "properties" and how they have optioned them out.

- February 1 2008 : Mexivada options Jefferson Options Gold/Silver Project to Stoneshield Capital. The release states " Under the terms of the Option agreement, StoneShield can acquire an initial 51% interest in the Property by incurring a total of US$3,500,000 in exploration expenditures on the property as follows: a minimum US$100,000 in expenditures on the Property to be incurred in the first year following TSX Venture Exchange acceptance....In addition, StoneShield will make cash payments of US$50,000 to Mexivada on Acceptance and US$50,000 to Mexivada on the first, second and third anniversary dates of Acceptance". Much like Sphere, stonesheild "commenced" work on the Jefferson Property but...no results to be found.

- December 22 2009 : Mexivada Options Goldstorm Gold Project to West Kirkland Mining. From the news release "Under the terms of the Option agreement, WKM can acquire an initial 56% interest in the Property by incurring a total of US$2,900,000 in exploration expenditures on the property, $340,000 in cash payments". The payment scheme is broken down into payments over 4 years, with a 90k payment upon "acceptance". Kirkland has a release stating it has commenced drilling, but I cannot find a release where any results are stated.


- May 31 2010 : Mexivada Options Yecora Gold/Silver Property. They optioned it to a company named District Gold inc. In addition, DG will make cash payments of $50,000 to Mexivada within 30 days of the Effective Date and $50,000 to Mexivada within 90 days of the Effective Date, and $25,000 on the first anniversary of the Effective date, and the sum of $40,000 by the second anniversary of the Effective Date, and $50,000 by the third anniversary of the Effective Date, as well as issue to Mexivada 200,000 shares of DG


- May 25 2010 : Mexivada Executes options of Tellurium Gold/Silver Property : They optioned this property in Mexico out to a company called California Gold Corp, which traded on the OTC board. The structure was the same, cash payments of 40k and 50k. This company is actually quite funny as well, as they ended up becoming part of their subsidiary MV Portfolios; a companies whose current corporate activity includes suing Google over a virtual realestate mapping/viewing program that was, allegedly, stolen from them . The agreement between CLGL and Mexivada has since been terminated.





 

Ohh... Poor Old Boy Malcolm Stevens and His Sphere Resources

I wrote about this stock a couple of times. I remember it fondly because I made some money off of it. If you don't recall, they are the company with a grass roots property next to Gold Standard Ventures Railroad property called the Poker Flats, the company who tried to raise $10,000,000 on corporate bonds with a share price of 0.01. Well, they had an option to earn in (iirc, 50%) then another 25% on the poker flats from Mexivada, another junior who rivals Sphere in its all out ridiculousness (although at least sphere is currently trading).




I have a number of posts on both companies.


So, on February 18 and many months after the closing date of the supposed bonds, the company releases a press release stating that the "Sphere Resources Group has achieved 51%  interest in the Poker Flats property by incurring $500,000 in exploration expenditures". Which is odd, firstly, because one has to wonder where that money came from, as they had none, and secondly, if they did indeed spend that much money where are any of the exploration results? Lastly, and perhaps much more disconcerting, is that the money needed to be spent by December 20th and the press release was put out 2 months after the fact. Read press release here.




Mexivada, without even enough to put out a release, sends out a corporate update via their website stating that the agreement has expired due to Sphere Resources not meeting the terms of the contract. I would find the link, but the website drives me crazy with it poor navigability.




So..stalemate. Out of sheer curiousity I actually sent an email to Malcolm Stevens asking him exactly whats going on. The jolly Australian fellow, who in the past has warmly referred to me as mate, gave me this response

"Mexivada’s last gasp! Quite inappropriate as you will see from Spartan’s audited financials next month.

 

Poker Flats,

Mexivada has a detailed list of Exploration Expnenditure which met the 51% requirement as per the Agreement."

Yes, their last gasp indeed...
Well, on September 8th a Sphere News release reads that they have renegotiated the terms, giving them until Dec. 31 to incur 300k exploration expenses for 51%, then another 250k for a further 24% by Dec 31 2017. Here is the press release.


So...wait, on February 18th you came out saying that the company had spent half a million dollars on exploration on the Poker Flats and then on September 8th a news release comes out stating that the terms have been renegotiated; as if nothing had ever been said about the supposed and previously announced earn in. Seems highly dishonest, if not illegal, to lie in a publically disseminated news release. As well, I would imagine lying in financial statements, as Stevens told me I would see the breakdown of expeditures in Spartans financials, is something of an offence. But... With the SEC or the OSCs limited power and resources to go after these things, and with much bigger fish to fry (which they usually don't anyways) these type of small OTC pump deals will get little attention. Its for this reason I like to bring attention, because the investor himself must look out for him. Usuaully if someone does it again, he'll do it more.




Happy investing!

Sphere Resources up big on the same news release

Today Gold Standard Ventures released a new set of drill results from their Railraod project. Nice results that are in the same ballpark as the results that really sent to SP off to highs of around $3.

Granted, not all the intercepts were exiting but, as the headline reads, 98m of 3.25 g/t Au. That not at all shabby. Stock is up 7 cents on the day so far at 0.67.


Now Sphere Resources, with their Poker Flats property directly bordering the railroad property (in fact, the border is a mere 75 meters from where GSV drilled these sets of holes), released this today in response to the drill results. Its funny because they released this in response to the last GSV news release on Aug.13 where the company detailed that they are to resume drilling on their Railroad project (funny....I never read that they had stopped drilling). IR team department at its best.


Anyway, the stock has been beating bouncing between 0.03 and 0.035 most of the day. A big gain, especially since less than a month ago shares could be picked up between 0.005 and 0.01.


I've been following this stock for a little while out of curiosity. They have a number of good properties but have never been able to find money to drill them. GSV keeps hitting good grades closer and closer to the Poker Flats border and, after an email correspondence with management, roughly $250,000 more is required to earn their interest. Not a lot of money. In this correspondence, I was told that management has been paying basic fees, which was a main concern of mine.

I have some shares in this, as stated in a previous write up I did, and I sold some off today at 0.03 (using TD) to derisk my position. That being said, I believe, based on a few basic observations, that there is more wind in this movement regardless of any financing news or not. Take a look at this graph.

1.  Remember when the guy on BNN touted this stock as a potential large winning trade, well...thats where you see the 10million in volume on the chart, which sets of heavy support at 0.02-0.025. Another 4.7million was traded the following day at the same 0.02-0.025

2. Today, following the GSV news release 4.3million shares have (so far) traded hands between 0.03 and 0.035 (a large block of 411,000 shares crossed at 0.03 early on). Just look at the volume, the comparative volume of the past six months have been nothing compared to these recent trades between 0.02 and 0.035.

3. Sure, there are enough people trading pennys, but I would imagine a healthy chunk of the investors are investing on the hunch that the financing comes though and a drill program can be complete. Don't let the 10 million number fool you, if they could raise even just 500,000 they are off the races (remember the poker flats, the property of interest after todays news release only requires 250k more to earn in).

Will it happen?.....maybe so, probably not. But either way, I'm pretty confident this upswing has more life in it still.

Further Thoughts.....

     .....On a unremarkable story

Spartan/Sphere/whatever are trying to earn in an initial 51% on the poker flats from currently suspended, soon to be delisted, Mexivada (a company which has been halted and subsequently bumped down to the NEX for not filing financials on their "diamond" project in Africa almost a year ago). Ran, if you could call it that, by Richard Redfern, Mexivada has essentially been a real estate company in the sense that the extent of their corporate activities have been optioning out properties to other penny stock companies and padding their wallets with the initial option payment and whatever shares may be thrown in with the deal. The TMX group gives 12 months after being suspended to file financials. Share-holders haven't heard a peep since the suspension and have been left holding a bag of worthless shares (that they can't even sell)

Now, for Sphere/Spartan to earn an initial 51% they need to spend 500k in exploration, then they can earn in for another 24%. Problem is, they have only 3 months more until the agreement expires. Further, the railroad fault zone can only be drilled until mid november, cutting down their time further.

I was curious, and emailed Malcolm Stevens inquiring about exactly how they plan on continuing as a going concern with only 6k in the bank. He told me that directors and management are paying listing/release fees out of pocket, and that they currently have about 250k in exploration on the Poker Flats. If they could actually raise the money, its quite possible as 150k can go to the CSMAT which only requires 5 days to complete. I actually believe that if they could ever get financing it could be a good project

Some times I'm amazed at exactly how much I know about this story...its funny and depressing at the same time, perhaps time could have been spent better. Maybe I should apply for a IR position at Sphere resources

 

Dundee buying Sphere

Last 10 trades of the day were from Dundee on the buy.


Stronger support on the ask side of $0.02 than in the bid.


I think that things may be building up for a swing up to 3-4 cents early next week. I still own a number of shares averaged at $0.01. 

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.

Sphere Resources

Sphere resources put out a press release today. The headline, which I'm sure pleased all holders of SPH, reads "Sphere Resources Subsidiary Spartan Gold Ltd Commences Its 2012 Exploration Program at Poker Flats and Ziggurat Properties Nevada, U.S.A."

http://www.stockhouse.com/financialtools/sn_newsreleases.aspx?qm_symbol=V.SPH.H&newsid=8582912

Background:

Sphere Resources is an Australian/Canadian exploration company focused on gold discoveries in the Red Lake District of Ontario and on the Carlin Trend in Nevada. The website has a detailed account of their properties in Nevada, but I'm sure most investors are looking at their poker flats property, which is right next to Gold Standard Ventures rail road property where a large gold zone is being explored.

Although the photos on the website are, unfortunately, quite poor it can be seen that Gold Standard Ventures Railroad property directly borders the poker flats. I'm surprised that, by this fact alone, the SP is still sitting at a measly 0.03. Considering that prior to GSVs $2 pp it was trading at nearly 3 dollars with some of the most hype around it from a junior explorer drilling in the states. Its hard to believe there hasn't been a bit more interest in SPH.

Their website says they have a $1,200,000 exploration budget for 2012 and a $2,400,000 exploration budget for 2013, which I assume is being provided for by their subsidiary Spartan Gold. The relationship between SPH and Spartan (SPAG) is a strange one. SPAG has an option to earn up to 75% interest on the poker flats property and SPH owns 53% of SPAG. The two companies have the same CEO, Malcolm Stevens.

Anyways, SPH may be something to look into. A more detailed write up on SPH will come at some point in the future.