With the gold price on the run, various small mining companies are trying to catch the opportunity and advertise their otherwise hardly going business. One of such stocks was recommended today by PennyTrader.com. According to the promotion, Source Gold Corp. (OTC:SRGL) has what it takes to secure its bright future.Penny Traders holding company was paid $135 thousand by the third party Orbit Capital, Inc. for the services. Still, despite the expensive advertising running on their stock, Source Gold still has to prove that their properties contain gold or the company’s market value will continue to swing like it did in the past.
When the Vulture Mine was acquired, the company didn’t even report the agreement as important development. They just reported the payment was made in common stocks, and commented: “the acquisition of Vulture: 1) was not material as it was made in the ordinary course of business; and 2) did not constitute the acquisition of a significant amount of assets.”[BANNER]
The mine is advertised to have been one of the most significant properties in the 1920-1930s. However, no other company tried to mine it for 60 years and it is closed since then, but now according to the ad it suddenly contains gold worth $2 billion. The company has yet to do Phase I drilling and prove it.
Considering the fact that Source Gold has no financial resources to start the mining operations and will have to do another fund raising, investing in the company would be very speculative right now. The last big price run at the end of March, 2010 also happened with the help of promoters. The stock plummeted later, as there were no fundamental reasons for the high market value.
