The $1000 Stock Market Challenge – Update #2

This is the second update in my ongoing experiment of investing in penny stocks. I thought that I would be able to double my money in 30 days but thus far, just breaking even would be a good thing. To date I am still down about $100.

Today I added 1000 shares of Geodex Minerals (GSX.TSX.V) to my Penny Stock Portfolio. I bought in at $0.12 / share and will be buying into this company for the foreseeable future, while it remains a penny stock.

Not that I have any inside information, but this company has made a remarkable and sizable find in my home province of New Brunswick. They are sitting on one of the worlds largest tungsten finds, with significant deposits of molybdenum (moly) and copper.

The current ore find is expected to last at least 30 years but there is bound to be more discovered as they have only explored the surface and shallow test holes.

With tungsten and moly, there is an ever increasing demand for each. Tungsten is being mined in northern Canada and China but there supplies are depleting. Moly is used to strengthen steel, making it less brittle, and used in nuclear power plants.

These guys do have some environmental and financial hurdles to tend to which is what increases the financial risks.

Environmental Hurdles

The bulk of the find is located under Sisson Brook, so that stream will have to be moved without jeopardizing the downriver waterways. with one being their tailings pond and another being Sission Brook and the Nashwaak River and Miramichi River Eco Systems.

Economic Hurdles

I sat in on a meeting with these guys back in August, I think, where they said that they needed to raise about $15 million to complete their initial exploratory and regulatory phase. Then they will need $450 million to build a processing facility and make the mine aoperational.

Local Area is Economically Depressed

The government wants this project to take off and needs it to work. The local area is primarliy a forestry-based economy and has collapsed. People need jobs. This company has said it will require upwards of 800 people to make the facility operational, over a period of about 18 months to 2 years, with an estimated work force of 300 – 350 employees.

Junior Mining Company

It is undoubtedly that this company will eventually enter into partnership or be bought out by a large mining company with deep pockets. I would predict this to happen once all environmental hurdles are cleared. If this happens, the days of penny stock status will be no more and I will make a bundle!

read Penny Stock update # 1- click here

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