Kaloyan Gadzhev

Santo Mining Corp. (OTC:SANP) Crashes after a 10-K Filing

by Kaloyan Gadzhev November 14, 2012
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There is a term which describes a state in which a person is experiencing two or more conflicting ideas or emotions. It's called cognitive dissonance, and some of the shareholders of Santo Mining Corp. (OTC:SANP, SANP message board) may be in such a state.

Yesterday the company, which has been pumped since late september, finally filed its 10-K, and there are plenty of facts to suggest that SANP may be over-valued even after yesterday's 20.77% drop to $1.03 per share.

At this price the market capitalization of SANP is around $66 million. While in general this wouldn't be an outrageous valuation for an exploration company, SANP just doesn't have enough to support it.

Here are some of the numbers in the 10-K filing:

  • $50,793 total current assets
  • $135,071 total assets
  • $125,868 total liabilities
  • $0 revenue

Traders and investors may find other things more concerning than the numbers. One such thing is that the company has acquired interest in a couple of claims with no proven reserves. SANP claims it targets "near-term production opportunities." At the same time their claims haven't been explored, and there is no guarantee there are commercially viable mining opportunities.

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Another fact may raise more suspicions. The company acquired its claims from one Gexplo, SRL, which is owned by Alain French, the CEO and President of SANP. In those transactions SANP has paid Mr. French at least 25.8 million shares of SANP common stock.

Basically, Mr. French has sold unexplored claims to himself for about $26.6 million at yesterday's closing price. Those facts could make a lot of traders stay away, but for those who believe the claims of the pumpers they may lose their importance due to stress caused by the cognitive dissonance created by what the pumpers say and the objective reality.

In the tout emails on SANP a pumper outfit going by the name of Penny Stock Wizard, boasts about how a previous pick of theirs, (PINK:SEFE) gained more than 260%. Of course they chose to conveniently omit the fact that after peaking at $2.96 SEFE crashed more than 95%, and its now trading 80% lower than the price at which they touted it.

Traders should be careful and always do their due diligence, especially with pumped stocks. There are people out there willing to say just about anything for a price.

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