The Pump for ARX Gold Corp (OTC:DUCP) Seems to be Working
Do you know what the distance between Australia and Costa Rica is? We didn’t know either, but we checked it and it’s roughly 8,500 miles. The long journey was probably made quite a few times by ARX Gold Corp (OTC:DUCP)’s management team in the last couple of months, but it would seem that it was all in vain.
It all started back in November when they announced that they have signed a letter of intent to acquire a gold mine in the Central American country and it’s only normal to think that DUCP‘s (whose principal offices are located in Australia) officers have had a few visits to check the mine and negotiate the deal. Unfortunately, they issued a press release yesterday according to which the acquisition has been postponed. They say that the other party is to blame for the delay but that won’t change the fact that they’re still not sure if the deal will be closed at all.
This reminds us of another acquisition that DUCP announced back in 2011. Back then the company was called Daulton Capital Corp, they were in the business of oil and natural gas exploration and they said that they are very close to adding a well in Papau New Guinea to their (rather short) list of assets. A quick check reveals that this never happened and we fear that the story is about to repeat itself with the Costa Rica mine.
Fear not, however as DUCP have another property. It’s in Queensland, Australia and the management team is mightily optimistic about it. So much so, in fact, that when they were acquiring the privately held company that owns the mining rights, they issued a whopping 4.5 billion shares of common stock. That said, the reason for the massive issuance is probably more attributable to the fact that they don’t have any money rather than the tonnes of gold that are waiting to be uncovered in the mine. Here’s what we found in DUCP‘s latest 10-Q covering the period before January 31, 2013:
- cash: $2 thousand
- total assets: $31 thousand
- total liabilities: $632 thousand
- no revenue since inception
- quarterly net loss: $544 thousand
We’re somewhat perplexed by the fact that the mine in Australia is not listed in the assets section of the statement, but we’ll assume that they do in fact own it. Will they be able to start operations, though?
Well, you would agree that, having in mind the dismal amount in their bank account, it’s a bit of a long shot. That’s why they are searching for additional funding for their operations and this time, they didn’t need to go to Costa Rica in order to find it. The trip was a lot shorter – to India.
Their financial statement says that they have engaged the services of an investment bank called Khandwala Securities Limited. It’s based in Mumbai and it will act as DUCP‘s placement agent. There is absolutely nothing wrong with that, however, when you are hiring a company to do any sort of services for you, some due diligence is never a bad call. And we’re not sure if DUCP made the effort on that front.
We did, however, and we discovered that at one point Khandwala were found guilty of unfair trading practices. When we dug a bit further we also saw that some private investors are not particularly happy with them, either. A couple of things that we would have kept in mind if we were to consider having Khandwala as our placement agent.
Despite all this, yesterday was a pretty exciting day for DUCP and they closed the session with a 21% gain. The emails for them continued even after the closing bell which means that today is shaping up to be pretty interesting as well. That doesn’t mean that the upward trend will continue, and having in mind the facts above, the ticker might experience a dramatic fall in the near future, which is why you should weigh the risks carefully before making any quick decisions.
