Friday, January 03, 2014

Eagle Hill Exploration Builds Out Quebec Project

Eagle Hill Exploration (EAG.V / EHECF) has a gold project in Quebec.  Canada is one of the few foreign jurisdictions that doesn't give me heartburn.  It's legal and economic systems share the Anglo-West's traditions that we like so much here in the US.  The currency is stable and the Canadian government isn't inclined to hyperinflate it away.

The bios for the management team are revealing.  The interim leadership is involved with running multiple companies.  I do not like corporate managers who cannot focus on a single company.  I do not invest in management teams that take a "lottery ticket" approach to resource development by floating multiple companies in the hope that one will be a hit.  I believe entrepreneurs should be totally focused on one business.

I used to be more generous about managers with outside interests, but not anymore.  Other companies figure quite prominently in the Eagle Hill team's outside interests:  Southern Arc Minerals and New Zealand Energy.  I blogged about New Zealand Energy back in July 2012 in the hope that they would impress me.  That company's performance since then has been disappointing.  They've lost money for several quarters and their share price is in the pennies.  Any investment made at the time I first noticed New Zealand Energy would be underwater today.  So much for corporate track records.

The first thing I noticed about Eagle Hill's Windfall Lake Property was the poor typesetting on that web page.  I guess people running three separate companies don't have time to edit web pages.  My eyes hurt from reading that thing.  Okay, back to the project.  The grades for their indicated and inferred resources are very high but I need to see 2P reserves to take it seriously  Check out their most recent 43-101 report dated September 10, 2012.  It recommended an exploration program budgeted at C$2.9M.  The company's news releases reveal that they have no difficulty attracting capital through private placements, but consider this item from August 2013.  Southern Arc Minerals made a C$12M investment and installed its own managers.  Maybe they know a good deal when they see one, but I wouldn't deal with a team that can't focus on a single project.  I also don't see why that news release announced plans for a $5M exploration program when the 43-101 said they only needed to spend $2.9M.

I cannot believe the high trading volume on the Canadian shares of this company.  Look at the EAG.V historical prices on Yahoo Finance.  I have no idea who would trade hundreds of thousands of shares daily on a stock under ten cents a share.  That is just plain nuts.  I cannot think of a single reason why I should put my own money into Eagle Hill.  I just can't figure out what's going on here.

Full disclosure:  No position in Eagle Hill Exploration at this time.