It seems that with all the hysteria and hype surrounding gold, our email boxes are being flooded with mail about the next “hot Gold stock”.  Arguably, some are very “hot” and others are “not”.  One of my more regular and enthusiastic members, Michael K. sent me an email alerting me to a Gold play that I had never heard of:  Constitution Mining Corporation (CMIN).

On its face, it is no different than most gold plays.  CMIN has 2 gold fields (in their case the Gold Sands Region of Northeastern Peru) that, according to the company, has proven reserves of over 72 MILLION ounces.  They are busy “proving out” these claims and, while they have no current revenue, are hoping to be a producing gold mining company in 2010.

Here is a link to their website which has a lot of information: CMIN site. They have a nice intro video on the first page that gives good info about their plan and prospects.

What sets CMIN apart is that investors are backing them whenever they need money….and, that is all the time.  With a burn rate of an average of a $1,000,000 per quarter, bank accounts shrink rapidly.  But, CMIN has been able to raise the capital they need WHEN they need it.  They have done several rounds of financing since they “came back to life” as CMIN two years ago.  Rumor has it that they just recently completed a $5MM round recently at a very good price for the investors.

A little aside here (and a teachable moment) - CMIN is the 4th incarnation of their public shell which started out 9 years ago as Crafty Admiral Enterprises (a seller of classic auto parts).  Two other failed ventures (oil and gas, nickel) completed the resume until CMIN took over.  So you see…..these companies rarely go away, they just change names.  There is no guarantee that an investor in the first business back in 2000 would still have valuable shares (due to recapitalizations, reverse splits, etc…), but CMIN’s situation is highly instructive to what happens with penny shells.

O.K. back to CMIN! - Here is the chart for CMIN.

CMIN is not a low-priced stock. It has a hefty valuation for a company that is still an exploration company.  I talked with the company and they are very bullish about their prospects.  The geology and potential of their gold fields could make them a high flier, the financing (and their ability to raise funds not once, but several times) speaks volumes about the efficacy of their claims.

I recommend watching CMIN. It would be nice to see if it could retest its recent high of $1.90, but this might be a longer term play.  I would definitely play the volatility, but keep this one on your target list.

Good luck and good trading

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