Wednesday, November 23, 2011

American Paramount Gold (APGA) Is Now Anything But Paramount

Trinity Investment Research is the sender of yet another teaser brochure near the bottom of my mailbag.  Last year their analyst Tim Fields wanted me to know about American Paramount Gold (APGA) because it was trading at $1 and was supposedly projected to go to $3 in the short term and $10 over the long term.  Of course, the newsletter gave no firm timelines for these projections, so "short" and "long" terms could have meant "a century" and "a millennium" respectively.  Anyway, the stock did trade around $1 in June and July 2010 and promptly began to slide to $0.30 by the end of 2010.  Today it closed at $0.03.  Anybody who went to Tim Fields' site at Untapped Wealth to read about this stock should have looked at its publicly available information instead. 

First, allow me to quote directly from the company's Profile page on Yahoo Finance:

American Paramount Gold Corp. does not have significant operations. The company intends to seek, investigate, and consummate a merger or other business combination, purchase of assets, or other strategic transaction with a corporation, partnership, limited liability company, or other operating business entity. Previously, it was engaged in the acquisition, exploration, and development of natural resource properties. The company was formerly known as Zebra Resources, Inc. and changed its name to American Paramount Gold Corp. in March 2010. American Paramount Gold Corp. was founded in 2006 and is based in Laguna Niguel, California.

Investors need to pay attention to things like this.  No significant operations . . . intends to seek something or other . . . with just about anyone or anything.  Well, at least no one can say they're not ambitious. 

This is supposed to be a gold mining company but only one of its senior leaders has ever had anything to do with mining.  That one person, whose bio has since apparently been deleted from Wikipedia, appears to have consulted with mining firms and is now semi-retired. 

They currently have negative shareholder equity, and they have had negative net income and negative free cash flow for several years.  I'll let their most recent 10-Q report (July 2011) explain why, in the company's own words:

Since we are an exploration stage company, there is no assurance that a commercially viable mineral reserve exists on any of our current or future properties, To date, we do not know if an economically viable mineral reserve exists on our property and there is no assurance that we will discover one. Even if we do eventually discover a mineral reserve on our property, there can be no assurance that we will be able to develop our property into a producing mine and extract those resources.

I have no idea how to make money from a stock like this one, nor would I ever wish to find out.  Have a nice day, Trinity Investment Research.  You must be very proud of the analysis you perform on stocks. 

Full disclosure:  No position in APGA, ever.