Sagebrush Gold (SAGE) Digging Up Sagebrushes

The Ord Oracle sent out a glossy promotional brochure for Sagebrush Gold (SAGE). It ended up in my pile of such glossies at some point so I figured I’d do it justice with a once-over look. Let’s ignore the boilerplate random comments from unrelated news stories and look at this stock’s fundamentals.

SAGE’s alleged possession of some advanced processing plant is meaningless. Look at the 10-Q filed on August 22, 2011 for management’s discussion of what this company is doing. SAGE used to be a web consulting company of some sort and then executed a reverse merger with an entertainment company. They got $13mm worth of cash by acquiring the subsidiaries of another company in July 2011. How did that work out? It’s impossible to tell because their financial statements are unaudited. They also had to withdraw a registered securities offering in July 2011.

Note that all of their operating revenue so far for 2011 came from promoter’s fees and advertising revenue. If you think that a shell company with a limited history in promotions has the credibility to explore for gold, please stop reading now. I can’t help you.

The company claims to be headquartered in Walnut Creek, California, across the bay from me. I have no intention of wasting a trip there to perform due diligence because I’ve never heard of an exploration company being headquartered anywhere other than a resource-rich area. Toronto and Las Vegas I could believe. Walnut Creek? Nope.

Their Relief Canyon property, in a historically gold-producing area, already has heap-leach pads and solution ponds installed. That would be interesting if this were an undeveloped property with lots of confirmed drill intercepts. The problem is that it’s an older property. The gold’s already been extracted. The indicated average ore grade of 0.017 oz/ton is so minuscule that mining it will never be economically worthwhile.

I really don’t need to see anything else. No thank you, Sagebrush.

Full disclosure: No position in SAGE at this time.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

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