Martin Tsvetkov

Is Spectral Capital Corporation (OTC:FCCN) Sitting On a Gold Mine?

by Martin Tsvetkov March 1, 2011
FCCN_chart.pngWhat would you do if you were offered a stock-based compensation by your employer as an alternative to your monthly salary? You would accept it, provided that the stock price was  increasing. More often than not, however, companies resort to such measures whenever they come across financial difficulties.

The case with Spectral Capital Corporation (OTC:FCCN, FCCN message board) appears to be of pretty much the same nature. In 2010, FCCN issued a total of 1 million options to its employees, another 2 million to advisors, and 10 million warrants to a third party with regard to a financing contract. The company's 10-K annual report filed with the SEC just a week ago not only sheds light on all these circumstances, but it also reveals a lot of other facts. According to the report, the company has "incurred losses since inception" which exceed $7 million, 21% of which have been accumulated in 2010 alone.

Nevertheless, CEO Jenifer Osterwalder is doing her best to justify her annual remuneration package of $125K by painting quite a rosy picture of the company's future. As it is, FCCN has already acquired two mineral properties in Russia and Kazakhstan, respectively. Both of them have been considered to have substantial deposits of gold and other minerals. However, the company will have to find a way to raise a total of $240 million - a sum it is required to invest in the two mineral properties within the next couple of years. Otherwise, its interest in the properties stands the risk of being severely reduced at best. No wonder that FCCN stock has been a subject of heavy promotion. At least $100 thousand have been wasted on advertising campaigns for the last week alone.

FCCN_logo.jpgAll these disturbing points with regard to the two mineral properties will immediately vanish into thin air if the latter really turn out to be full of gold. After all, on Feb.7, Osterwalder assured stockholders that the properties were located "in regions where significant gold has been found."

Provided that the US Export-Import Bank gives the green light to its proposed financing of $167 million for the Russian property, the situation might take a completely different turn for the better.

The large scale of the two current projects makes it really difficult to predict what the future has in store for FCCN. At least, Ms. Osterwalder appears to be fully confident of success.

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