Sanborn Resources Ltd (OTCBB:SANB) Retreats

It’s been more than a week since we last wrote about Sanborn Resources Ltd (OTCBB:SANB) so we decided to check on them and see what’s going on. While we can’t say that we like what we see, things seem to be moving according to plan. The question is: “Whose plan?”.

Let’s take a minute to remind ourselves what happened over the last couple of weeks. We first wrote about SANB on July 9 when we saw some increased movement around the ticker and it’s fair to say that our eyebrows were raised as soon as we opened the financial statement. It looked like the perfect recipe for a pump job – a change in the name, business, management team, a stock split and an increase in the authorized share capital. These are all steps taken in the preparation of a penny stock venture for a huge paid promotion and if you don’t believe us, you can take a look at the filings of one of the biggest pump failures in the recent months, Arch Therapeutics Inc (OTCBB:ARTH).

Sure enough, it didn’t take us long to find out that the promotion was already underway. This time however, the pumpers had taken a more unconventional approach. Unlike other, more traditional awareness campaigns where emails, hard-mailer brochures and landing pages are used, this time the only visible vehicle for spreading the optimism around was an article on a website called Financier Times.

Article or not, a pump is a pump and it’s quite an expensive one at that. Scroll down below the comments and you will see a small print disclaimer which says that the total promotional budget is $3 million and for that sort of money, you would expect it to be pretty effective at giving the price a boost. At first it seemed to be. Between July 5 and July 11 it managed to get investors hyped up and that in turn, pushed the ticker up by a whopping 132%. After that however, tables turned and SANB took on a different course – South. A couple of red sessions resulted in around 35% in losses and left quite a lot of angry investors behind. The ticker was virtually back where it started but we knew that a pump so expensive won’t end that quickly.

Sure enough, SANB started recovering and by Monday, it was pretty close to the heights reached during the previous peak. Once again however, it ran out of steam and yesterday, it fell hard down bringing about 13% in losses on a daily trading volume of around 690 thousand shares. Right now, about an hour into the session it’s a further 12% below yesterday’s close and while we can’t be sure, we’re struggling to see how it will manage to recover by the end of the day. If you still have some money locked in SANB, you’re probably wondering if there’s any chance of recovering some of the investments.

More often than not, the answer to that question is a bit hard to swallow. Another penny stock that received the same exact treatment not more than a couple of months ago is called Northumberland Resources Inc (OTCMKTS:NHUR). Just like SANB, they were featured in an optimistic article on the same exact website and while there were also some emails involved, the budget was exactly the same. In case you’re wondering what happened to them, you can simply take a look at the chart on the right.

Unlike SANB however, NHUR at least seem to have some sort of operations and if you take a look at our articles on them, you will see that they’ve even managed to generate revenues over the years. This means that after the dust settles completely, they do have a chance (albeit ridiculously slim) of recovering.

The case of SANB is a little bit different. The company was dealing with pieces of art a couple of months ago and for some unexplained reason, they decided to switch the business sector completely by acquiring mineral rights in Peru. The chronological proximity between the change in control and the pump might suggest that once all is said and done, SANB will simply be forgotten.

Of course, at this point we can’t be sure that this is exactly what’s going to happen but some of the red flags that we talked about in previous articles are, we reckon, a reason to be extra careful when making your decision on SANB.