On the 20th of January I was introduced to a new potential
advertiser for 321gold and 321energy named MGX Minerals
Inc. (XMG:CSE; MGXMF:OTCPK). I was quite impressed with both the
President of the company, Jared Lazeson, and his vision for the future of his
company.
He reminded me a lot of a fellow I met in the summer of 2011. Back then
for hours we discussed the concept of a gold backed banking system. We drove
around Colombia visiting a copper/gold explorer south of Medellin. We spent
hours trapped in the back of a van chatting about how you could make gold the
basis of a banking scheme. His name was Roy Sebag.
He ran with his idea after a few modifications and turned it into BitGold that
eventually bought GoldMoney. He was all of 25 at the time and easily one of
the three smartest guys I have ever met.
He modified his plan over time and in 2015 started BitGold. It's been a
giant success since it allows everyone to go on his or her own personal gold
standard. He's probably made $100 million in share appreciation. He's all of
31 now and no doubt has a golden future. The money is really no big deal; he
made $50 million in well-timed investments by the time he was 25 from an
initial start at the age of about 18.
When I talked to Jared Lazeson in January I got the same feeling of
dealing with a very bright guy who understood just where he was going to go
and how he was going to get there. So he probably would also qualify as being
on of the three smartest guys I have ever met and light years ahead of me.
But I am just smart enough to recognize a good idea when I see one.
We talked. He wanted to advertise and I wanted some shares based on the
conversation. The shares were $0.69 apiece. A giant negative for the company
was being based on the C-Exchange but somehow the company had great liquidity
in spite of being on a poor exchange.
I made my mind up to buy some shares on the coming Monday. Alas, some rat
wrote the company up on the 19th on Streetwise Reports. Over the
weekend Streetwise sent the article to hundreds of other sites on
their list.
I was willing to pay $0.70 a share for MGX but the shares opened at $0.72
and never looked back. They closed the day at $0.83, up 20% on the day. I
reread the article and while it was a nice article, I thought the author
missed most of the substance of what I understood to be the direction of MGX.
Actually I couldn't figure out from the article exactly what the company was
going to do. When I talked to Jared, I though I had a clear idea of where
they were headed but reading the article was like looking at a totally
different company.
I hate chasing shares higher but after a 20% rocket higher to a close of
$0.83, way above my bid of $0.70, the stock gapped higher the next day,
opening at $.86 and never looking back. I really wanted some shares so I put
in a bid at $0.95 and got filled finally. The shares continued to move up six
days in a row going from $0.69 on the 20th of January to an
intraday high of $2.75 on the 30th of January. In seven trading
days, MGX boomed up by 298%.
I was in a quandary.
For those wise readers who have read my Amazon best seller Nobody Knows Anything, I repeatedly make the point
that you have to buy cheap and sell dear. If you don't take a profit when you
have it, the only other alternative is to take a loss when you have to.
Let's call the shares cheap on the 19th of January at $0.69.
After all, we have the benefit of hindsight and now we know it went almost
300% higher in seven trading days. So again with the benefit of hindsight we
know $2.75 was not cheap, it was dear. So I sold. Naturally like most people,
I am incapable of picking the very top. I sold for $2.35 for a gross profit
ignoring commissions of $1.40 a share in ten days on a $0.95 investment. I
missed the top by minutes but made a nice profit. But I still wanted those
shares.
Nothing goes straight up and nothing goes straight down. Anything going up
six days in a row is unusual so it would be perfectly natural for those
shares to make a giant correction. They did, going down five days in a row.
If you have read my book, you will fully understand that I think 85% of
investors are as dumb as a rock and all you need to do to profit is figure
out what they are doing and do the opposite. So I put in a stink bid of
$1.50. On the second day of the decline the price plunged to $1.53 a share,
down 25% on the day and very near my price. However, corrections don't end in
two days.
That's also pretty irrational so I changed my bid to $1.05 believing those
damn fools who wanted to buy at $2.75 a share would be whimpering about a
pump and dump and would beg to unload their shares at the bottom. They did
and on the fourth day of the decline the shares touched $.92 and I filled my
purchase at $1.05.
Are most investors stupid? In a word, yes. They want to invest using their
rear view mirror. They buy at tops only to sell at bottoms and it's always
someone else's fault. It's like walking into your Porsche dealer and being
told that the price of the model you crave for your birthday is $75,000. And
you realize the price is out of your league. The dealer whispers in your ear
that actually they are overstocked and if you come back in a week you can buy
it $10,000 cheaper.
What does the average investor do? He tells the dealer that he doesn't
want it cheaper, after all, that means no one wants it probably because there
is something wrong with it. The average investor tells the dealer to call him
when the price doubles because then it's safe to invest; everyone wants them.
That may sound stupid but that is exactly what most investors do. So you
need to figure out if you want to be in the 85% crying in their beer about
conspiracies and manipulation or in the 15% laughing on their way to the
bank. Take a wild stab at which group my readers are in.
If you notice carefully, I have spent a lot of time talking about human
behavior and very little time talking about MGX. Actually the behavior of
investors is key. It's more important than the commodity or the management or
the location. You have to understand where you are in the trading cycle. To
do that, you need to understand sentiment. We hit a 29 year low in
expectations for gold in December. That means nothing more than gold was
cheap. In January of 2016, we hit a 5000 year low in commodities. That meant
commodities in general were cheap. That's the time to buy.
Now on to the boring subject of just what business MGX is really in and
why you need to take a close gander at them.
In business and in life there are evolutionary changes and revolutionary
changes. Mining lithium is evolutionary. There is plenty of it around but
because of the need for electric vehicles and a need to store massive amounts
of electricity, the demand for lithium has gone through the roof. And MGX was
just another one of those 75 "lithium" next big deals. On the strength
of their participation in the lithium space, the shares went from $0.08 in
April of 2016 to $0.80 or so in January of 2017.
But MGX and Jared Lazeson are on to something quite revolutionary. You see
a lot of lithium comes from brine found in basins. Chile, Argentina and
Bolivia are home to a lot of the production of lithium. Basically they drill
the basins until they come to the brine. They pump it to the surface and
spread it out in giant ponds where the water eventually evaporates and they
can collect the solid material containing the salt, magnesium and lithium and
then further concentrate the material for sale as a commodity. In these
basins, naturally the brine is considered valuable, an asset.
But there is a giant economic activity where brine is considered a
liability. That's the oil and gas business. You see when you drill an oil
well and the oil flows to the surface or you pump it up, you have something
the energy business calls a "Water Cut."
You are not only bring up oil, in many fields, you are bringing up brine or
simply put, salt water.
In some fields, for every barrel of oil they produce, they may produce
50-100 barrels of brine. That brine contains high values of salt and lithium
and magnesium and even silica. The same material that is considered an asset
in a basin in South America is thought of as a liability in the oil business.
The oil companies have to retrieve the oil from the fluid and pump the waste
back down a hole. It's a giant problem getting rid of the water.
Jared Lazeson got together with some of the smartest technical guys in the
oil and gas business and they have come up with a process to take the brine
that the energy people consider a liability and remove the lithium and
magnesium and salt and silica as valuable byproducts. They are turning a
liability for the oil business into an asset in a potential profit center.
Now that's revolutionary.
MGX is in the process of picking up the company named PurLucid who invented
the process and Jared believes in the concept to the point his people have
patented the process. The acquisition was announced on September 15th of
2016. It calls for MGX to invest $5 million to obtain 50% of PurLucid over
two years and an additional $10 million to buy the remaining 50%. PurLucid is
in the final stages of finishing the pilot plant to prove the process and
develop working costs and profit potential.
MGX is doing a lot of things beyond my understanding and certainly beyond
the understanding of the several people who have written about the company in
the past two weeks.
People who know me and have followed my writing over the past 16 years
know that I am blunt and to the point. I want everyone reading this to
understand something vital. MGX is a work in progress. Until the pilot plant
is finished and working no one is going to know that the potential for
profit. Of course it's a great idea but great ideas are a dime a dozen. I
have met hundreds of people with great ideas that would make a fortune if
only someone else would fund it.
So how do you judge a company with a great idea that went from $0.08 a
share last April to $2.75 last week to $1.25 today? That's actually quite
easy. The company made an announcement on January 30th of some
significance. They announced a new Chairman.
Now you may be thinking, "So what, Bob? Every company has a
Chairman." And you would be right. But whom they picked up as Chairman
means he did the due diligence and now you and I don't have to. The new Chairman of MGX Minerals is named Marc Bruner and he may
as well have been the inventor of oil production from shale. His background in oil and gas is second to none.
I'm told Marc Bruner is a billionaire. Billionaires don't fart
around with companies with a $100 million dollar market cap potential. He
sees the potential in what MGX is now calling "petrolithium." Marc Bruner is not working for a
salary. His compensation over the next two years is 17% of the company based
on meeting certain goals. You may rest assured that if he sees potential and
wants to invest his time, there is a billion dollar payoff down the road not
just for him.
I believe that Marc Bruner believes in the process. So I wanted to own
shares in the company and I do. There will be a lot of significant news being
released over the next little while and I will do my best to keep my readers
advised. I think the process works. I think Marc Bruner is a very smart guy
and Jared Lazeson is wise enough to hire the smartest people he can hire.
That's a recipe for success in my view. The potential for MGX is a game
changer and they may well become the swing producer for lithium, magnesium and
pure silica.
Readers should know that there is somewhere between 125 and 200 ounces of
gold per cubic kilometer of salt water. The issue is not if there are
valuable minerals in brine but what the costs in energy are to remove them.
If MGX has a cost effective process to remove lithium, magnesium, sodium
chloride and silica from what is now nothing but a liability, they will
indeed be on to a gold mine.
MGX is an advertiser. I own shares and any time they do a private
placement I will probably participate. There is a lot of information on the
web about the company and the people. Please do your own due diligence.
MGX Minerals
XMG-C $1.21 (Feb 10, 2017)
MGXMF-OTCBB 60.8 million shares
MGX Minerals website
Bob and Barb Moriarty brought 321gold.com
to the Internet almost 16 years ago. They later added 321energy.com to
cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both
sites feature articles, editorial opinions, pricing figures and updates on
current events affecting both sectors. Previously, Moriarty was a Marine F-4B
and O-1 pilot with more than 832 missions in Vietnam. He holds 14
international aviation records.
Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: MGX Minerals.
MGX Minerals is an advertiser on 321 Gold.
2) The following companies mentioned in the article are sponsors of
Streetwise Reports: None. Streetwise Reports does not accept stock in
exchange for its services. The information provided above is for
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