Sanborn Resources Ltd (OTCBB:SANB) Erases A Quarter Of Its Value

It’s been nearly a month since we wrote our first article on Sanborn Resources Ltd (OTCBB:SANB) and, since there’s been hardly any new information in terms of press releases and announcements, we decided that we’re going to do a quick recap of the developments around the ticker during the last four weeks.

The whole thing actually started back in March. SANB (then known as Universal Tech Corp.) decided that they want to completely overhaul their business plan and they set themselves the task of finding gold somewhere in South America. They changed the company name to better reflect their operations, got a new ticker symbol and performed a 100 for 1 stock split. On March 16, SANB sold quite a lot of stock at $0.001 per share without saying why they’re doing this, and a few weeks later, despite being in the mineral exploration business for less than a month, they already had something to work on.

SANB purchased some mining claims in Peru and they got them from an entity called Rae Wallace Mining, Co. (OTCMKTS:RAEW), a publicly traded company with a price of $0.10 per share and no filings since 2009, who received $750 thousand in exchange for the properties.

Once the acquisition was completed, SANB went quiet for some time and because of the lack of any new information, trading was pretty much non-existent. Then, an article went online at the beginning of July and the ticker exploded onto the scene. It was published on a website called Financier Times and it spoke about a host of things ranging from the price of gold all the way to the decisions that famous investor, Mr. George Soros, has taken over the past couple of months. Ultimately, the author says that SANB is poised to take the gold exploration business by storm and because of it, the ticker could reach $3 per share.

A couple of factors make us rather dubious about these bold claims. The first of which is the source of the article. You can see that the website has been deliberately designed to look like the Internet portal of a serious media, but when you take the time and do some research, you will see that most of the articles have been copied directly from real media giants like Wall Street Journal. In fact, the only entries on the website that have been written by Financier Times themselves are the ones designed to tout penny stock companies.

We first stumbled upon such an advertorial a couple of months ago, the featured company back then was Northumberland Resources Inc (OTCMKTS:NHUR) and you can see from the chart on the right that while the optimism in Financier Times’ coverage did give the price a boost, it was never going to be a viable long-term investment. Sure enough, right now, just four months after the pumping action began, NHUR is way below it’s pre-promotional value.

Of course, Financier Times aren’t touting small cap ventures just for the fun of it. The promotional budget for NHUR‘s pump was $3 million and the same amount of cash was paid for raising awareness around SANB.

Despite that, SANB doesn’t seem to be performing as well. As soon as the article went online, the ticker sprang to life and it took it no more than three days to make the run from $0.38 to $0.60. A few sessions later, however, it was back where it started. It went up again around July 22 but the ascend was once again extremely short lived and this time it seemed that there was nothing that could stop the ticker from falling into oblivion. Probably that’s why, Central A Marketing, the people who are managing the promotional budget, decided that desperate times call for desperate measures and that’s why they asked David Cohen a/k/a Research Driven Investor to send out a few alerts.

This proved rather effective and within just four days Mr. Cohen managed to push the ticker all the way up to a new 52-week high. He then said that he is moving on however, and once again, things took a turn for the worse.

Somebody had to do something and this time it was Billionaire Stocks (who were also involved in the pump for NHUR) that came up with an alert. Their email arrived early in the morning yesterday and our article, which came out just a couple of hours later, dealt with analyzing it. You can see that not all of the things presented in Billionaire Stocks’ narrative reflect reality 100%, but regardless of this, we thought that it might give the price a boost.

Instead, SANB smashed the records in terms of volume and lost more than 26% in just six and a half hours of trading. This means that regardless of the mailing activity and the pumpers’ efforts, the ticker remains extremely volatile and prone to sudden changes in direction, which is why treading extremely carefully and weighing all the risks is essential before making any investment decisions. The same goes for other small cap ventures like Amanasu Techno Holdings Corp (OTCMKTS:ANSU) and BluForest Inc (OTCMKTS:BLUF) who are also put under the promotional pressure.