Stock Guru are in the Dark with NORTH BAY RESOURCES INC (PINK:NBRI)

If small cap companies and their claims are anything to go by, there should be millions of tonnes of gold that is still not dug out from the ground. Reading through emails and press-releases every day we see that hundreds upon hundreds of companies are fighting a furious battle for who will make the boldest claims and who will make their share prices go higher. The promoters on the other hand are also there watching the action and receiving a hefty compensation every once in a while. NORTH BAY RESOURCES INC (PINK:NBRI) and Stock Guru are a classic case in point.

Just like many other gold mining companies that we have covered, NBRI are very excited about finding gold. What’s more a year ago they purchased a mine, which is great. The mine comes with all the properties and equipment which is even better. But let’s not get too emotional. We mentioned that they have bought the mine and every piece of machinery that was on it, however, there are just a couple of things that we’re not too sure about.

First and foremost, the mine isn’t actually owned by NBRI. At least not yet. As of September 30 2012 when their latest report was signed, they had a further $1.8 million to pay to the previous owner. It won’t be as simple as going to the bank, unfortunately. The financial statement that they have included in the report is not particularly promising:

• cash: $70 thousand
• total assets: $3 million in unproven mineral claims
• total current liabilities: $3.6 million
• net loss since inception: $12 million
• no revenue

What’s more, even though they are allowed to work on the mine now, they still haven’t started the actual process of digging up gold. This is partly because they have no money to fund the process, but also because, before they even start, they need to freshen it up a bit. Recently they told us that they have refurbished one of the tunnels, however, they failed to mention some important things like the total number of tunnels that need repairs made on them.

Nor do they tell us how much more money they’ll need and, more importantly, how are they going to obtain the cash. Since there is no information on that, we just had to guess that they will simply borrow the money and add one more loan to their collection. We use the word “collection” because NBRI have a staggering amount of loans that they have to pay. Most of them are convertible, which means that millions of shares were issued during the last couple of years. That must have made the shareholders really happy.

Having read through NBRI‘s dreadful report, we decided to have a little fun and see where their office is located. When we looked it up on Google Maps we were rather surprised. We will let you decide whether this is a good location for a company office. All we know is that when we asked the boss if we will ever work at a place that has a pool in the back yard, he laughed at us and told us, quite firmly, to go back to work.

When we did, we looked through the emails that we have received in the past from Stock Guru. It turned out that they the “guru” part of their newsletter name bight be a bit of a stretch. Last October they promoted Firemans Contractors Inc. (PINK:FRCN) and the chart shows what happened after the hype was over.

We did quite a thorough research on NBRI. Unfortunately, the only thing that we liked about it was the office.