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XMFSinchiruna (27.12)

Alert: Primero Mining to Launch This Week

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August 02, 2010 – Comments (56) | RELATED TICKERS: SLW , GG , IAG

I corresponded with former IAMGOLD CEO and incoming Primero Mining CEO Joe Conway today, and discovered that they expect Primero Mining shares to begin trading on the Toronto Stock Exchange this week under the very memorable ticker symbol: "P".

He expects shares to price in the range of C$5.00 to C$5.50 per share for an initial market cap of around C$450-$500 (his best guess ... subject to change).

Now for the sad news: at least for now, there will be no U.S. listing for these shares. They will trade solely on the TSX, and the company will not offer a sponsored pink sheet listing (though that doesn't mean one won't turn up). I expressed my disappointment regarding the resulting difficulty that U.S. investors may have in participating in this incredible growth opportunity, and he indicated that they will revisit the idea later in the year.

For anyone who doesn't recognize the name of Primero Mining, this is the new company engineered by a dream-team of industry executives from Silver Wheaton, Goldcorp, and elsewhere ... created atop a rock-solid foundation of Goldcorp's recently divested San Dimas mine.

Please see my article about the company here for further information. 

http://www.fool.com/investing/small-cap/2010/06/04/an-amazing-day-for-a-bad-night.aspx

The deal of the decade
This transaction is a first-rate steal for Primero, which for $500 million will acquire a fully operational mine with more than $2.1 billion worth of proven and probable gold and silver reserves at present market prices. Permitting a competitive cost structure that saw 2009 production of 113,000 ounces of gold at total cash costs of just $287 per ounce, the ore grades for both gold and silver at San Dimas are simply phenomenal. But that's just a fraction of the story. You see, San Dimas has a history of production going back to 1757, and as Goldcorp explains:

The long history of continuous mining at San Dimas and the known occurrence of the mineral veins have overridden the need to prove up reserves for many years ahead. Consequently, the true potential of the deposits are neither fully realized nor reflected in the stated reserves and resources.

..............

An executive dream team
Completing the overnight transformation, Primero Mining will be led by incoming president and CEO Joseph Conway … who enjoyed noteworthy success in transforming IAMGOLD (NYSE: IAG) into one of the leading growth stories of the mid-tier gold producers. Topping off this influx of proven management, Eduardo Luna will oversee San Dimas operations as executive VP and president of the Primero's Mexico subsidiary. Not only did Luna execute an impressive production expansion at San Dimas over the course of 16 years as president of the Luismin operations (which Goldcorp acquired in 2005), but he has also served as chairman of my top equity pick in the entire precious metals sector: Silver Wheaton (NYSE: SLW). Wade Nesmith, Mala Noche's Founder and CEO (and still a founding director at Silver Wheaton) will shift to the chairman's seat.

...............

The value proposition
Going back to our discussion of San Dimas reserves above, Goldcorp's willingness to essentially guarantee 220 million ounces of payable silver production stands as a strong testament to the wide divide between San Dimas' stated mineable reserves of 60.9 million ounces and the far-greater production potential anticipated by the mine's operators. If the market fails to account for that divide in its initial pricing of Primero shares, this could inject a strong value component into what is already shaping up as a compelling growth stock.

Bred for growth
Peering further down the road, I see a Primero utilizing this imaginative transformation as a catapult into further acquisitive growth in the manner of New Gold (AMEX: NGD) and Eldorado Gold (NYSE: EGO) before it. Don't expect those deals to follow immediately since the company will first focus upon optimizing the San Dimas operation through 2011 -- but strong cash flow from San Dimas is likely to open up multiple opportunities for expansion by 2012. Primero has already signaled a Latin American focus for future acquisitions, which leads this Fool to ponder potential pairings with perpetually undervalued producers like Gammon Gold (NYSE: GRS) and Minefinders (AMEX: MFN).

However Primero's promising future plays out, this new miner's first step into immediate production is the greatest leap I have ever witnessed from a small and little-known entity. With such an auspicious beginning, Fools are strongly encouraged to track the progress of this miner right from the primero moment.

 

If your broker grants direct access to TSX-listed stocks, you can count your blessings ... because this is one stock I scores of investors would love to own if they could.

 

 

56 Comments – Post Your Own

#1) On August 02, 2010 at 7:59 PM, chk999 (99.97) wrote:

Why did Goldcorp divest the mine?

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#2) On August 02, 2010 at 8:23 PM, XMFSinchiruna (27.12) wrote:

chk999

http://www.fool.com/investing/small-cap/2010/06/04/an-amazing-day-for-a-bad-night.aspx

Goldcorp shareholders who may be inclined to decry the underpriced transaction will find substantial solace in the 30% equity stake in the new entity that Goldcorp will obtain. In a brilliant twist of the deal, I believe that Goldcorp's $175 million haul in soon-to-be-issued Primero Mining shares is bound to appreciate handsomely from the moment Primero hits the trading floors. The remainder of the $500 million will consist of $275 million in cash -- financed by the equity offering -- and a $50 million interest-bearing note.

http://www.goldcorp.com/news/goldcorp/index.php?&content_id=780

“Like the recently announced sale of the Escobal silver deposit, the capital derived from monetizing this asset will be re-deployed into funding our growth without diluting our shareholders. San Dimas has been an important contributor to Goldcorp’s success over the years, with new discoveries enhancing the long term production profile at this historic mine.  We look forward to participating in the future success of Mala Noche and San Dimas through our significant ownership interest in the company.”

 

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#3) On August 02, 2010 at 11:48 PM, djshagggyd (72.54) wrote:

Great write-up Sinch, thanks for the heads up! I'm excited to look further into this company.

It appears my broker offers stocks on the TSX exchange... So I guess I'm one of the lucky ones!

~djshagggyd

 

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#4) On August 03, 2010 at 9:33 AM, Gonzhouse (24.16) wrote:

Thanks for the heads-up.  My broker does TSX exchange shares so I'm ready to rock.

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#5) On August 03, 2010 at 3:33 PM, djshagggyd (72.54) wrote:

Sinch-

Have you heard anything about what day Primero will launch?

I looked around online and on their website, but it appears there is no news on it yet. I even signed up for their mailing list :)

Also, is this one that you would recommend Dollar Cost Averaging on until Mr. Market has a chance to properly evaluate it? Or do you think it would be smarter to invest as much as possible all in one shot? I know this is a subjective question... I'm just curious what your opinion is.

Thanks for all the work you do at TMF... all of your articles are excellent and I have learned a lot from you.

~justin 

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#6) On August 03, 2010 at 5:03 PM, silverminer (30.49) wrote:

djshagggyd

You're correct ... this was something of an inside scoop that was not announced (at least not anywhere that I had encountered). He didn't know which day shares would launch precisely, but thought it was likely to be this week.

I think the most likely scenario is that this stock will increase in value incrementally as investors discover the nuts and bolts of what's on the table. For those that do their homework ahead of time, I think this is the sort of opportunity one might wish to enter on the ground floor.

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#7) On August 03, 2010 at 7:36 PM, djshagggyd (72.54) wrote:

Thanks for the reply Sinch. When I read that you met with CEO Joe Conway and I immediately knew this was going to be a very telling article.

And I'd categorize it as a pretty big inside scoop! Especially considering that when I searched for "Primero Mining" after reading your article yesterday... very few items came up that weren't authored by you.

As an amateur (in my second year), the thought of meeting with the CEO of a company I'm considering for investment sounds both fun and nerve wracking. It really got my imagination going.

I haven't made any final conclusions about whether I will invest in  "P" when it arrives on the TSX. But I've done some fairly thorough searching the last two days... and I really can't find anything not to like about the company or its management. I will do more reading tonight, and hopefully fill in some of the gaps in my knowledge.

I've gotta say though... seeing the picture on their home page makes me want to move to Mexico and become a miner:  

 

If anybody else is interested in upcoming press releases, etc...  here is the link to Primero's mailing list

Thanks again Sinch! 

~justin 

 

 

 

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#8) On August 04, 2010 at 8:21 AM, silverminer (30.49) wrote:

CEOs are people too. :)

Good luck all you Primero first-comers. 

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#9) On August 06, 2010 at 7:43 AM, silverminer (30.49) wrote:

As of Friday pre-market, it looks as though the listing is up under the new symbol and appears set to begin trading today.

http://tmx.quotemedia.com/quote.php?qm_symbol=p

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#10) On August 06, 2010 at 9:05 AM, djshagggyd (72.54) wrote:

Yup... just saw that! 

Exciting stuff! 

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#11) On August 06, 2010 at 9:17 AM, catoismymotor (< 20) wrote:

djshaggyd,

Which broker do you use? I have been thinking of changing from the one I use because of such limitations.

 

Sinchy,

Thanks for the heads up. I missed this article when you posted it a few days ago. Not being able to use the TSX with my current broker is a bummer because of this and a few other reasons. At this time I'll have to stay with my overly chuncky position in SLW, but keep an eye on Primero.

 

Cato

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#12) On August 06, 2010 at 9:30 AM, djshagggyd (72.54) wrote:

Cato-

I use Scottrade.

I'm looking into it a little bit more now... and I'm a little confused because when I search for "Primero Mining"... the listing comes up... but when I click on the link it brings me to:

Mala Noche Resources Corp MNOCF:Pink OTC Markets Inc 

Yesterday when I searched for "Primero", nothing at all came up. So I'm assuming that "MNOCF" will be renamed to "P" at some point...

Sinch or Cato do you have any insight into this? 

I'm going to have to look into this more to make sure "MNOCF" is actually what I think it is...

I'm a beginner... so if anybody has any thoughts on this I'd appreciate it!

Thanks!

~justin 

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#13) On August 06, 2010 at 9:38 AM, djshagggyd (72.54) wrote:

Ok... it's changing as I type... haha... now it's:

Primero Mining Corp MNOCF:Pink OTC Markets Inc 

And below it, there is a news release saying that it will be TSX Venture: "P". So I think this is it... Scottrade must just be a little behind on the listing. I'm still going to wait to pull the trigger until I figure out for sure if this is it.... 

~justin 

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#14) On August 06, 2010 at 9:45 AM, catoismymotor (< 20) wrote:

DJ,

Ummm...No idea. Maybe it is a temporary place marker for P while I's and T's are being dotted and crossed?

Cato the Confounded.

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#15) On August 06, 2010 at 10:10 AM, djshagggyd (72.54) wrote:

I called Scottrade and they are looking into it for me...

...currently they are calling their Toronto peeps... and they will get back with me once they know what the full story is.

I'll post an update here once they call me back. 

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#16) On August 06, 2010 at 10:41 AM, djshagggyd (72.54) wrote:

Ok here is the response I got from Scottrade:

They said that MNOCF is an ADR which deals directly with the TSX Venture: P. The lady I spoke with told me that MNOCF includes Primero Mining and that by investing in MNOCF it would be the same thing as investing in "P".

This morning while I was doing some research on my own I noticed the last trade price on MNOCF was 26 cents. But as soon as the market opened the spread was between $4 and $5. Which seems to be in line with what Sinch said the initial share price would be.

So at least through Scottrade... I think MNOCF is Primero Mining.

Sinch... please correct me if I'm wrong.

Thanks! 

~justin 

 

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#17) On August 06, 2010 at 10:45 AM, Gonzhouse (24.16) wrote:

I used Wells Fargo and bought symbol MNOCF, which is reported as Primero Mining, this morning.  The transfer to symbol P will take some undisclosed time but Primero is available right now. Price quote was between 5.11 and 5.24, I'm waiting confirmation for exact price. 

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#18) On August 06, 2010 at 1:22 PM, mhy729 (30.47) wrote:

Hmm that is somewhat confusing for me.  I believe that Mala Noche is to be renamed Primero along with the IPO and acquisition of San Dimas from Goldcorp, and that existing Mala Noche shares will convert to Primero shares on a 20-to-1 basis, so retaining the MNOCF listing (and have the repricing djshagggyd reported) seems strange.  I suppose it may just be similar to a reverse stock split, but I've never traded a security through such an event so I don't know how that works.

One more thing for Scottrade users...I believe that not all Canadian stocks have ADRs or ORDs (usually five letters and ending with 'F' or 'Y' if not listed on one the major US exchanges) available for online trading at the $7 commission rate.  In these cases you would have to make a broker-assisted trade which has a significantly higher commission rate of $27.

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#19) On August 06, 2010 at 1:31 PM, silverminer (30.49) wrote:

Gonzhouse

I doubt those MNOCF shares will transfer into shares of P ... I think you have merely purchased shares in an unsponsored ADR that may continue to track the price of P (adjusted for the currency exchange)..

I will be able to look into this more closely after 2pm... but take your time, Fools ... no bargain is worth diving into without conducting due diligence.

Primero CEO Joe Conway told me there would be no sponsored pink sheet listing for Primero. MNOCF is clearly the old Mala Noche pink sheets, but what's unclear is the fate of those pink sheets now that mala noche no longer exists. I need to go back and see whether Mala Noche's OTC listing was sponsored or unsponsored, but feel free to sleuth that out nefore I get back here. :)

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#20) On August 06, 2010 at 2:12 PM, CCLEGG (< 20) wrote:

I'm new to all this stuff, I found this OTC update?

http://www.dtcc.com/downloads/legal/imp_notices/2010/nscc/otc/OTC-150.pdf

I think it was page three

MNOCF = Primero

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#21) On August 06, 2010 at 2:18 PM, djshagggyd (72.54) wrote:

Thanks Sinch.

Curious to see what you find out... I've exhausted all of my research options at this point... so I'm hoping other Fools will have some insight into the situation.

I think you have merely purchased shares in an unsponsored ADR that may continue to track the price of P (adjusted for the currency exchange)..

 I think you may be right about that.

Based on the information I got from my broker, I decided to purchase a small number of shares of MNOCF (she told me it was the same as buying "P"). My plan is to dollar cost average 3 times over the next 12 months.

After I made the transaction online... I went to a site that tracks the TSX:

http://tmx.quotemedia.com/quote.php?qm_symbol=p&locale=EN

And I can see my transaction specifically listed on the "P" ticker page. If I scroll all the way down the page... I can see my transaction occurred at 10:29AM.

In my novice opinion... this tells me that MNOCF is tracking "P" exactly (after currency adjustments are made).

Can anyone tell me what the implications are of being an "unsponsored ADR"? Is it not as good as owning the real thing? If not... why? Is it riskier somehow?

I wish my broker would have explained this a little more thoroughly instead of advising me that "P" and "MNOCF" were the same thing.

Thanks,

~justin 

p.s.-  mhy729... I paid $7 commission on this one... not $27.

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#22) On August 06, 2010 at 2:20 PM, djshagggyd (72.54) wrote:

Thanks CCLEGG... that looks promising. 

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#23) On August 06, 2010 at 2:59 PM, silverminer (30.49) wrote:

djshagggyd

fascinating and reassuring observation with respect to seeing your actual transaction listed at the TSX website. That's cool! That at least proves that someone actually went and purchased physical shaes of P to match your MNOCF purchase.

But now that I'm delving into the meat of the topic, I want to dig deeper. I asked my broker whether they could divine who the issuer of MNOCF is, what sorts of rules they must adhere to with respect to that transaction, and what sorts of counterparty risk I may incur vis-a-vis the issuers' promise to deilver corresponding shares of "P". This connects to prior unanswered questions I've had regarding whether issuers of unsponsored pink sheets can engage in unregulated derivative and options trading on the basis of my suppposed "holding". I've dug around quite a bit on that point, and no one seems to know.

When I have a free moment, I will investigate further.

For now, it's safe to assume that MNOCF is just like any other unsponsored ADR tradingon the pink sheets ... it may change its symbol following the name change, but it will continue to track the currency-adjusted price of P ... albeit likely on low volume and therefore limited liquidity.

Thanks to everyone for posting your thoughts and observations on these important matters, and please stay tuned for the results of forthcoming research.

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#24) On August 06, 2010 at 3:19 PM, silverminer (30.49) wrote:

I am still troubled, however, by the lack of volume on MNOCF today. It makes me want to dot the 'i;s and cross the 't's with this collective line of inquiry.

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#25) On August 06, 2010 at 3:50 PM, djshagggyd (72.54) wrote:

Thank you very much for your thorough research and help Sinch. I very much appreciate it!

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#26) On August 06, 2010 at 5:05 PM, djshagggyd (72.54) wrote:

Here is the securities firm listed as the "buyer" from my transaction earlier: 

http://www.wolverton.ca/ContactUs/Branch.aspx?ID=e95fb97d-878d-4438-b621-7cd2ed95c3bd

Here is the firm listed as the seller:

http://www.scotiacapital.com/ 

There are contact phone numbers and emails for each... I may contact them and ask them some of the questions Sinch brought up.

If I do, I will let you know the response I get here.

Btw... these buyers and sellers are specific to my transaction ONLY (listed as happening at 10:29AM for 87 shares). Other transactions have different buyers and sellers than mine do. 

I don't know if that information is useful... but at least it's interesting (to me anyway... haha) 

~justin 

 

p.s.-For anyone who may have missed it earlier... here is a link displaying the last ten trades on "P":

http://tmx.quotemedia.com/quote.php?qm_symbol=p&locale=EN

My transaction is unfortunately no longer listed... but thankfully I wrote down all the info before it was bumped off the screen.

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#27) On August 06, 2010 at 8:57 PM, mrsavyinvestor (< 20) wrote:

 "P" on the Canadian TSX Venture Exchange:

http://www.stockwatch.com/Quote/Detail.aspx?symbol=P&region=C

Speaking form a Canadian perspective and a lot of experience within Canadian stock markets I think this may be useful:

The Mala Noche (formerly symbol "MLA" on the TSX-Venture exchange) shares have been rolled up 20 to 1 and combined with the subscription receipts (formerly symbol "MLA.R" on the TSX-Venture exchange) and together they have created "P" which is temporarily trading on the TSX-Venture exchange and will soon be trading on the TSX senoir board.

The "P" shares began trading today.

The subscription receipts (50 million outstanding) which have been trading since July 20 have been trading in a $ 5.80 to $ 6.00 range. The subscription price was $ 6.00 which included a 40/100 warrant with a $ 8.00 strike price.

Today when they opened combined with the former MLA shares (just over 3 million outstanding) they traded in a range of $ 5.20 to $ 5.30.

Albeit, this on the first day of "P" trading, with thin bids/asks and volume I think the "P" shares are going to quickly find the $ 6.00 mark and will trade higher as the value of the San Dimas deal begins to reflect in the share price. Could be some real bargains for "P" shares in the early days.

As I mentioned before the "P" shares will very soon be moved from the TSX-Venture board to the TSX main board.

Good luck to all former Mala Noche shareholders who now have a stake in Primero as well as good luck all new future shareholders. Should (will) be very exciting times ahead.

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#28) On August 08, 2010 at 2:51 PM, mhy729 (30.47) wrote:

mrsavyinvestor

Thanks for the info, all makes sense.  One thing missing though is information on the MNOCF listing.  You might not know much about that though as you have direct access to the 'P' listing on the TSX Venture Exchange.

Did you just join CAPS?

djshagggyd 

Have you been taking advantage of the Scottrade ReferALL Program to get free trades?  I recall in one of your blogs being concerned with the commissions eating up your profits because you were trading in small amounts (I face this issue as well...when I say I traded 25 I mean 25 shares, not 25 round lots of 2500 shares).  I've managed to rack up a good number of free trades and for now no longer worry about making small trades to cost-average in.  They expire in six months, so I won't be able to save them for my later sale trades.

I think this is one of the best features of Scottrade.  I've had an account for a few years, and only recently took advantage of this referral program.

TMFSinchiruna 

I am very much looking forward to your post on the interview with Endeavour CEO Bradford Cooke!  EXK has been one of my earliest holdings (a very modest position I opened sometime after learning about it from you a couple of years back), and although I did suffer through that massive drop-off in silver back in 2008, it rebounded quite nicely and I am in the black.  I plan on holding for a long while, and almost added to the position during this recent correction.

Thanks for everything!  This is one Fool (one of many I'm sure) who is greatly appreciative of your efforts here.  I've learned a lot from this site, and the people are friendly and helpful.  :)

- Marcus

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#29) On August 08, 2010 at 10:02 PM, silverminer (30.49) wrote:

 

From: Christopher Barker

Sent: August-06-10 2:17 PM
To: Tamara Brown
Cc: Joe Conway
Subject: Primero launch question

 

Hi Tamara,

 

I am inquiring on behalf of some of my readers who are eagerly seeking ways to procure shares of Primero Mining from here in the states.

 

As you will see in the comments of my attached blog post, several of them have gone out and purchased MNOCF, the Mala Noche pink sheet listing.

 

Now, I surmise that MNOCF is not a sponsored ADR, but I wonder whether you might still be able to help me inform my readers as to the likely fate of that unsponsored ADR. Do you suspect the issuers of the unsponsored listing will change the symbol and have the listing continue as a proxy for P, or is there another scenario that you see being more likely.

 

This can be completely off the record if you prefer ... I'm just trying to clear up some confusion among my highly interested and eager readers. Several of them, including myself, have never encountered this particular scenario before.

 

Thank you in advance your kind and prompt reply.

 

Sincerely,

 

Christopher Barker

 

Hi Christopher,

 

Unfortunately I am unable to help you.  As you recognized the ADR is unsponsored and we have no control over it in any way (nor any knowledge about who does).  We would recommend your readers contact their broker and discuss how they can purchase Primero shares. 

 

We thank you for your continued support.

 

Regards,

 

Tamara

 

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#30) On August 09, 2010 at 8:14 AM, mhy729 (30.47) wrote:

Thanks for the update Chris.  Too bad Primero cannot help with this.  :(

For Scottrade users, something weird is afoot with ticker MNOCF.  It seems to show a close at 5.12 last Friday, but the chart indicates ~100 and the Scottrader platform shows the previous close at 102.30, which is very close to 20x 5.12.  I am sending them an email about this.

I hope everyone has a good week!

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#31) On August 09, 2010 at 10:02 AM, CCLEGG (< 20) wrote:

WOW........... SELL SELL SELL...............LOL

$5.16 to $102.30 on friday, something fishy.

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#32) On August 09, 2010 at 11:37 AM, silverminer (30.49) wrote:

If you own a position in MNOCF, call the SEC... that's the best advice I can give at the moment. I plan to contact the SEC on the matter myself, but for those with shares of these pink sheets may have the incentive to make a more formal and timely inquiry.

Also ... keep nagging your brokers. It's their job to be able to tell you who the issuer is and what will become of the security now that the related stock no longer exists.

Buyer beware until we get this all squared away. I am ONLY recommending shares of "P" traded on the TSXV, as I am very uncomfortable with this unsponsored ADR until we gather further information.

Sinch

 

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#33) On August 09, 2010 at 12:27 PM, djshagggyd (72.54) wrote:

Thanks for your help Sinch... and for emailing Primero on our behalf. 

I tried calling the SEC and they said that to ask a question or file a complaint you have to do it through their website... so that's what I did.

If anyone else would like to file a complaint or ask a question here is the link:

https://tts.sec.gov/oiea/QuestionsAndComments.html

Also, I found this page:

http://www.otcmarkets.com/marketactivity/corpActions.jsp?index=5&symbol=MNOCF&actionDate=1281330127000

Which is concerning because it lists MNOCF as having been "deleted" today. I'm not sure what that means exactly... or what it would mean for investors who owned MNOCF.

I will keep looking into this and post whatever I may find.

 

 

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#34) On August 09, 2010 at 1:02 PM, djshagggyd (72.54) wrote:

More possible info:

click here to read an interesting comment about MNOCF on a message board.

It looks as if MNOCF is going through some sort of reverse split. More info here:

click here

Also... MNOCF is considered a "Grey Market" stock by OTCmarkets.com

So I don't know if the SEC will have any info or be able to help.

Here is the definition I found for "Grey Market":

There are no market makers in this security. It is not listed, traded or quoted on any stock exchange, the OTCBB or the Pink Sheets. Trades in grey market stocks are reported by broker-dealers to their Self Regulatory Organization (SRO) and the SRO distributes the trade data to market data vendors and financial websites so investors can track price and volume. Since grey market securities are not traded or quoted on an exchange or interdealer quotation system, investor's bids and offers are not collected in a central spot so market transparency is diminished and Best Execution of orders is difficult. 

Sounds pretty shady!!

I would DEFINITELY advise against purchasing MNOCF. At least until further details come to light.

Btw... I decided to file a complaint with the SEC about Scottrade too. They advised me that buying shares of "MNOCF" would be the same as buying shares of "P". I think it was an honest mistake... but they were obviously giving me misinformation.

Sure am glad I only purchased a small amount! So it won't hurt that bad if this does end up being a complete scam.

~djshagggyd 

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#35) On August 09, 2010 at 1:14 PM, mhy729 (30.47) wrote:

Well, a rep from Scottrade did get back to me but the response was quite lackluster.  Nothing was mentioned regarding the $102.30 price, even though I explicitly asked about it.  I have made a follow-up inquiry with a series of specific questions, so hopefully all of those will be answered.

So far there is no trading activity with MNOCF on Scottrade, but I do see the bid/asks dancing around the $5 level, with a spread of about 0.10.

djshagggyd I'm sure everything will get sorted out eventually, but certainly having to go through this worrisome situation is rather crappy.  :(

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#36) On August 09, 2010 at 1:42 PM, djshagggyd (72.54) wrote:

mhy729-

Yes, we've learned a valuable lesson... which is be patient and don't trust your broker!

I feel bad for Sinch too because MNOCF is tainting his wonderful write-up on "P". All along he warned us to be patient and diligent.

I was diligent... but I didn't account for the misinformation given to me by Scottrade. Patience would have saved me from that mistake. Duly noted!

In the meantime... here is the definition of Reverse Split from Investopedia:

A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same.

For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It's usually a bad sign if a company is forced to reverse split - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted. 

This is what I keep finding when I search for news on the MNOCF stock split:

MNOCF 

Primero Mining Corp. New Ordinary Shares (Canada) 
1-20 R/S. Refer to Daily list of 8/5/2010. 1-20 R/S concurrent with name change from Mala Noche Resources Corp to Primero Mining Corp 

It appears that there is a 1/20 reverse spit that has happened. And I imagine that it will cause MNOCF to have little or no volume. It may be difficult or impossible to trade for the short-term (hopefully not, but maybe longterm too). 

We shall see. Either way it'll be interesting!

~djshagggyd 

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#37) On August 09, 2010 at 2:29 PM, XMFSinchiruna (27.12) wrote:

I'm preparing to approach this issue with a different strategy. My broker didn't take much notice of my inquiry perhaps because I do not own shares. However, I have similar questions surrounding another unsponsored, OTC ADR that I do own ... and I will try to find out how this works in a merger/acquisition scenario and report my findings back here.

I am also considering switching brokers so I can gain direct access to TSX offerings.

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#38) On August 09, 2010 at 5:33 PM, XMFSinchiruna (27.12) wrote:

My question to the SEC:

I am seeking information regarding unsponsored ADRs that trade on the pink sheets or the OTC markets.

Many investors, including myself, have turned to unsponsored ADRs on the pink sheets to gain exposure to Canadian companies whose official, sponsored, TSX-listed shares are not accessible through their respective brokers.

However, it is shocking, the more I look into this, how little information is available to investors in these securities. Several investors, including myself, have found that brokers are unable to discern even the identity of the issuer of these shares!

Also at issue is the opacity regarding what rules said issuers must adhere to with respect to those securities. Investors are routinely told by their brokers that investing in the pink sheet listing is "identical" to investing in the company itself through the sponsored listing. However, in no way are investors assured that the TSX-listed shares presumably held for them in trust are free from competing claims such as options or short positions that may be written on those holdings.

Just today, I asked my broker to please find out who the issuer of one of these pink sheet ADRs is so that I might pose these questions to them. To my amazement, the standard response is for investors to contact the investor relations department of the company in question ... although as I am sure you are aware the companies have no relationship whatsoever with these unsponsored ADRs.

Investors like me are eager to surmise the exact nature of these securities. It is presumed that the issuer purchases and holds shares of the relavant TSX-listed stock on behalf of the investor. However, the precise nature of the contract represented by these securities can not be discerned.

For example, one has no way to verify whether the issuer of these securities is required to hold the corresponding shares in a simple and unencumbered manner, or whether the securities are merely a promise to deliver shares. This lack of transparency would appear to empower the issuer of these securities to derive all manner of derivative positions based upon my pink sheet holding as collateral. Since there is no disclosure to investors regarding the nature of the contract, one might also presume that there are no rules or guidelines. If I am mistaken in this regard, and existing SEC regulations require that unsponsored ADRs listed on the pink sheets must correspond directly to unencumbered holdings of the relevant company's common shares, then please correct me.

My broker has referred me to the transfer agent to discern the identity of the issuer, and the transfer agent in turn has directed me back the broker. Investors are routinely reminded to conduct due diligence, but in this case I think you'll agree that the information required simply is not freely available.

Thank you in advance for helping me to answer these key questions that must be answered before investors can ascertain the safety of unsponsored ADR shares listed on the pink sheets.

Sincerely,

Christopher Barker

 

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#39) On August 09, 2010 at 5:35 PM, XMFSinchiruna (27.12) wrote:

My broker referred me to ComputerShare, which they indicated as the transfer agent. ComputerShare referred me back to my broker. Not surprisingly, both of them also tried to refer me to the company's investor relations department, even though the company has no relationship whatsoever with the securities in question.

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#40) On August 09, 2010 at 6:41 PM, djshagggyd (72.54) wrote:

Sinch-

Wow, I can't thank you enough for the letter you wrote the SEC. I wrote them one as well, but being that I am a beginning investor... I wasn't able to word my questions/thoughts as clearly and intelligently as you did. Thank you!

I tracked down my transfer agent and wrote them a letter as well.

Tomorrow I plan to call Scottrade back again... I think I'm going to file a formal complaint with them about the misinformation I was given.

Thanks again for your help Christopher!

~justin 

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#41) On August 09, 2010 at 8:31 PM, XMFSinchiruna (27.12) wrote:

Ultimately, the buck stops with the broker that sells us these securities... if they can't tell us what we're buying, then no one will.

Here's something interesting ... I spoke with a representative from ComputerShare Canada ... the listed transfer agent for MNOCF according to my broker, and the very well intentioned, helpful representative there could not help me. I read him the ISIN number for the security, and he said in his system it corresponded with the ISIN for Primero's common shares ... which would actually suggest that they are equivalent securities. I thought that was rather incongruent with everything else I've been learning.

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#42) On August 10, 2010 at 2:48 AM, mhy729 (30.47) wrote:

I heard back from Scottrade, from a different rep this time.  She was quite thorough and provided a much better response than the previous.

Dear Marcus:

Thank you for following up on the recent stock split of MNOCF and for notifying us of the error you encountered on Scottrader Streaming quotes.

There was a bad feed for MNOCF in our Scottrader Streaming Quotes platform.  This has been reported to our technical support department and it has been deemed an error.  The last stock price was $5.25, which was on Friday after the stock split.

The stock split was executed on 8/6/2010.  The time of the split is undetermined; there really isn't a way to determine at what time this took place in each client's account.  If a client held MNOCF and was not able to trade it, their share amounts would have been divided by 20.  Typically, when a stock goes through a reverse stock split, such as this, the stock will look like this in their account prior to the completion of the split: MNOCF#.  The # symbol denotes there is some sort of action going on with the security.  At this time, clients will be unable to place a trade online for the security.  Once the security has been updated either from a split or name change, the # sign will disappear.

While a security is undergoing reorganization, it will not be available for online trading. Such corporate actions can include name changes, symbol changes, mergers and forward or reverse splits. During reorganization periods, please call your local Scottrade branch office for trading assistance with the security in question. You can obtain the telephone number through our Branch Locator.

We will post the new shares and/or cash to your account once payment has been received from the depository or agent.

Please let us know if we may be of further assistance.  Thank you for choosing Scottrade.

Sincerely,

Meredith M.

National Service Center | Scottrade, Inc.

So it seems that indeed there was a 20-to-1 reverse stock split as djshagggyd reported.  I suspect that the erroneous $102.30 previous close happened because of a mistaken repricing to account for the share consolidation, which I imagine was essentially a duplication of what was already done on market open last Friday, perhaps in a manner similar to that brought to our attention by TMFSinchiruna when a stock pays out a dividend.  (See here if you haven't already...quite an interesting read:  Think Twice Before Diving for Dividends)

As long as this 20-to-1 consolidation correctly occurred between Thursday's close and Friday's open (I am assuming this to be so), then there shouldn't be any problems for those that bought shares on Friday.  I'd think it is possible that at some point the MNOCF ticker will be changed to one that more corresponds to the new company name...not sure if that could be done so as to avoid the suspension of trading during market hours.  I'll post one more question to the Scottrade support people in regards to that.  I also wonder what would happen if you are holding MNOCF, and at some future time (hopefully soon!) Primero decides to get involved with sponsored ADRs to be listed on one of the major US exchanges.  Perhaps I will ask this as well.

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#43) On August 10, 2010 at 2:57 AM, mhy729 (30.47) wrote:

Thanks for the research/inquiries and getting back to us Justin and Chris!  Getting quite an education here.  Just read up on ISINs at Wikipedia here...very interesting indeed.  So far everything looks kosher for the shares you are holding djshagggyd.  What do you think Sinch?

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#44) On August 10, 2010 at 10:24 AM, XMFSinchiruna (27.12) wrote:

Although I think there is a decent chance that under normal market conditions these unsponsored pink sheet listings will correspond effectively to exposure to the company's common shares, this whole experience has led me to reconsider my degree of exposure to these instruments. I am actively seeking ways to reduce my holdings of unsponsored ADRs, and may swith brokers to gain direct access to the TSX.

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#45) On August 10, 2010 at 12:05 PM, 100ozRound (29.42) wrote:

Sinch - do you have any thoughts on Brigus Gold (the Apollo Gold + Linear Gold Merger)

http://www.brigusgold.com/

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#46) On August 10, 2010 at 3:53 PM, djshagggyd (72.54) wrote:

mhy729-

Thanks for sharing the response you got from Scottrade!

I've been very busy at work today and haven't had a chance to call and follow-up with them. I may try emailing them after work. If I find out any new info, I'll be sure to post it here.

I'd be curious to see the response you get if you do end up deciding to write to them again.

I still feel pretty irritated by the whole situation... especially the lack of professionalism displayed by my broker. But I think you're right... I don't think we are in any immediate danger of losing our money... at least I hope! I won't really feel better until this whole reverse-split situation gets worked out.

I'm tired of seeing an extra $8,000 dollars in my account that isn't real... it's a dirty taunt!!

~justin 

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#47) On August 10, 2010 at 4:44 PM, djshagggyd (72.54) wrote:

Sinch-

Which brokers offer TSX stocks?

 

Fools- 

Be careful... because when I called Scottrade and asked them about TSX ventures the conversation went like this:

"I am interested in purchasing a stock on the TSX... does Scottrade offer that service?" 

"Yes we offer some stocks on the Toronto exchange."

"Oh really?" I said 

"Do you offer Primero Mining?" 

"Yes, the ticker is MNOCF." replied my broker

"Oh... I thought the ticker was listed as "P"?

"MNOCF is the same as "P", it's just that the ticker hasn't been updated yet in our system. It's what's called an ADR and is directly tied to "P". Everything should be straightened out in our system within the next few days."

"So purchasing "MNOCF" is the same as purchasing "P"?"

"Yes."

"So MNOCF is Primero Mining? It's really the same thing?"

"Yes." 

And 15 minutes later I bought MNOCF. 

In light of this conversation... I'd like to warn anyone inquiring about TSX stocks... because your broker may have no idea what they are talking about. Don't take their word for it. Follow up on whatever they say and make certain that the facts are correct.

Patience, diligence, and fact checking are essential components to intelligent investing...

Ultimately, I failed at all three... (even though I thought I was acting intelligently at the time).

So don't be like me! 

Lesson learned, 

~justin

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#48) On August 10, 2010 at 4:46 PM, CCLEGG (< 20) wrote:

I know what you mean! My portfolio doubled!!! I about wet myself when I turned on the puter monday morning.

This 20:1 split is for the former stock holders, thier stock was at .26 and the new stock was at 5.17 so to balance out the old holders had a 20:1 bringing thier value to 5.17.

Some how we got mixed up in this value split but I'm still showing all the shares, as soon as it is back working and the price goes to 5.17 (or more!) we will be showing right.

Now, can I claim the loss on my taxes?? LOL

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#49) On August 12, 2010 at 11:39 AM, CCLEGG (< 20) wrote:

Any news on this?

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#50) On August 12, 2010 at 11:49 AM, djshagggyd (72.54) wrote:

Still nothin new on my end. I haven't received a response from the SEC or from my transfer agent. Scottrade hasn't been able to give me any useful information either.

If things aren't worked out by Monday I think I'm going to go visit my broker in person.

~justin

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#51) On August 12, 2010 at 12:44 PM, mhy729 (30.47) wrote:

It would appear that everything checks out for MNOCF.  The response that Sinch got regarding the equivalence of MNOCF and P with the identical ISINs, the report from djshagggyd about the trade for P showing up on the TMX website when his order for MNOCF executed, and so far all of the information we are getting from Scottrade, suggests to me that there is nothing shady going on.

The last reply I got from Scottrade indicated that indeed should MNOCF undergo a symbol change, trading on it would be frozen until the change is finalized.  The same thing would occur should Primero start trading on a different exchange here in the US (e.g. a sponsored ADR is established for trading on one of the major exchanges).

For some reason there is no trading activity showing for MNOCF since last Friday.  I think the feed info is not being sent out properly by the party responsible for doing this; no doubt a slip-up which occurred with the reverse stock split.  Some info is getting through as the bid/asks are continually updating on the Scottrader platform.  I am awaiting a response from Scottrade regarding this issue.

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#52) On August 12, 2010 at 12:52 PM, djshagggyd (72.54) wrote:

I think you're right mhy729... all the facts seem to be pointing in the direction of non-shadiness. Thanks for the info.

I'm not terribly concerned at this point... just frustrated that it's taking so long to get sorted out. But I'm definitely not losing sleep over it.

I have a feeling that within the next week things will become much more clear. 

~justin 

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#53) On August 13, 2010 at 9:18 AM, silverminer (30.49) wrote:

100ozRound

Yeah ... I own it.

After selling out of Apollo years ago at a small loss, I had recently slipped back in just prior to the merger at a massive discount to my original cost basis. I am bullish about it even just from a valuation standpoint, and I think Black Fox is a fairly solid platform for further growth.

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#54) On August 13, 2010 at 9:29 AM, silverminer (30.49) wrote:

djshagggyd

I wish I knew which brokers offered direct TSX trades. I started to do some searching, but my time remains very tight this week. If anyone knows of a good, low-cost broker with direct TSX access, I'd be grateful for the recommendation. :)

I do think your MNOCF holding will be worked out, but I think we have all learned just how little-understood these unsponsored ADRs are even by the brokers who deal in them. They are not "exactly the same" as holding shares of P ... they are a proxy for P, and somewhere, someone is presumably holding shares of P in trust for those very pink sheets. HOWEVER, we know nothing about who the issuing entity/ies is/are, we know nothing about the rules they are required to adhere to with respect to proprietary trading that may take place on those P shares they hold for those pink sheets (I have not been successful at determining whether, for example, those shares might be used to back short positions that would directly conflict with our long interest), etc.... too many questions.

That being said, I own quite a few unsponsored ADRs, and have for several years with no discernable hiccups except the low volume issues affecting liquidity (I have one tiny holding that has been frozen at the same price for months!). 

We don't know what sort of counterparty risk might exist ... i.e. what sorts of failures we are guaranteed against. What is the entitiy holding those P shares for us were to fold? Will our broker be there then to tell us these pink sheets are "exactly the same" as P? I can't be sure, and so I am reducing my eposure to unsponsored ADRs traded on the OTCs.

Please rest assured I will continue to post more information over the coming months and years as I uncover additional facts or encounter additional brick walls.

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#55) On August 16, 2010 at 12:18 PM, djshagggyd (72.54) wrote:

Sinch-

Thanks for your response! I look forward to hearing what information you may be able to uncover.

Everyone with MNOCF- 

Hooray! It looks as if my account is back to normal today... so hopefully everything with MNOCF has been worked out. I also got response from Scottrade about my complaint, but it wasn't very helpful or supportive. Pretty disappointing actually. 

On the flipside... I got a thorough response from the SEC today. I'm impressed and encouraged by their letter: 

Dear Mr. Birchard: 

Thank you for you recent email to the Securities and Exchange Commission concerning Primero Mining Corp and Scottrade. We appreciate the opportunity to review your concerns.

We maintain a database of information about the complaints and inquiries we receive. This database allows us to track whether a troubling situation may be developing about a particular issue, company, broker, stock, or other securities product. The information you have provided will be reflected in our database.

Please be advised that the SEC’s official public records do not contain any registration information about Primero Mining Corporation. However, the Pinks Sheets LLC, an unofficial reference source, contains some information about the trading of Pimero Mining Corp (symbol: MNOCF) on its website at:
http://www.otcmarkets.com/stock/MNOCF . Please note that the Pink Sheets is a private website and is not affiliated with the SEC. 

Generally, upon receipt of complaints of this type, our office contacts the brokerage firm in question requesting that they review the matter and provide a written response to the complaint. If you would like us to contact Scottrade for a response to your concerns, please let me know. Also, to the extent that you have additional information or documentation that may help to support your position, please feel free to send copies to my attention via return email at help@sec.gov or by fax at (202) 772-9293.

Sometimes our efforts result in complaints being successfully resolved. But in other cases, the firm denies wrongdoing or it is unclear if any wrongdoing has occurred. In those cases, the dispute is out of our hands, and we will not be able to help you any further. That’s because the SEC does not have the authority to resolve individual disputes or force the firm to admit liability or wrongdoing.

Under those circumstances, you will have to take legal action on your own to resolve the dispute. In the interim, you may want to review our brochure on how the SEC handles investor complaints:
http://www.sec.gov/investor/pubs/howoiea.htm

Once again, thank you for your correspondence. I hope this information proves helpful to you. If you have any questions, please contact me.
Sincerely, 

Amy R. 
Investor Assistance Specialist
Office of Investor Education and Advocacy 
U.S. Securities and Exchange Commission 
(800) 732-0330 
 

Since everything finally appears to be worked out with MNOCF, I don't think I will pursue my complaints any further. But it's great to know that the SEC is so supportive. I would highly recommend writing them if anyone has any complaints or concerns in the future.

Best of luck to everyone with Primero and MNOCF!

Hoping to finally close the book on this debacle...

~justin 

 

 

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#56) On August 16, 2010 at 12:46 PM, djshagggyd (72.54) wrote:

sorry for the bold! something got messed up with the comment editor I guess...

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