The fact that Portage Resources Inc. (PINKSHEETS: POTG) still exists as a publicly traded company is amazing but perhaps even more amazing is the fact that there are still investors who see the pre-exploration stage mining company as an opportunity to make money. Despite countless press releases highlighting their potential, particularly their Wukakuy project in Peru that “has a reserve estimate of 58,000,000 oz of Ag valued at over $2,300,000,000″ and their Tabaconas Linderos project, also in Peru, which “has an estimate of 500,000 oz of Au valued at over $902,000,000,” POTG has yet see dollar one in revenue.
It would be one thing if there were some red flags that investors should take note of but the reality is the entire company is a red flag and has been for some time. While stock promoters managed to get shares as high as 1.24 back in late June it has been nothing but a steady decline since and on November 3, 2011 they hit a 52-week low of 0.0530. Amazingly POTG continues to spin their web and on Friday they issued a press release saying they had reached a “major milestone.” Of course that milestone wasn’t revenue or even plans to drill, it was “obtaining community blessing on their Wuakakuy properties.”
Without question gaining community approval for mining activities is imperative in a country like Peru but that doesn’t mean POTG is any closer to actually monetizing a project. Company CEO Paul Luna tried to trump up the community approval by saying “Even the great and historic Newmont Mining can have the best laid plans but if the community does not give their blessing, problems can arise. I am happy at this time but there is so much more work to be done, we are prepared for the task at hand.”
Just what that “task at hand” is remains to be seen. It is highly doubtful that Luna, the same guy who purchased four hundred eighty million (480,000,000) shares of the company’s issued and outstanding common stock, approximately 75.33% of the company’s total issued and outstanding stock, for $20,000 back in May, means actually establishing the existence of a commercially minable project.
A more likely scenario for the task at hand is announcing more reserve estimates for projects rather than actually exploring the properties and delivering proven reserves. It’s a lot easier to attract investors with lofty projections rather than humbling results.
Once those investors have been pulled in it wouldn’t come as any surprise to find Luna tell investors the same story he used back in August concerning the company’s Holly Properties in Nevada. In July POTG couldn’t have been more enthusiastic about the property only to say in August that the “properties were an excellent prospect but did not fit into the overall company plan of responsible growth.”
Nowhere in any press release issued by POTG is “responsible growth” defined leaving it to the investor to understand this term as they will. Judging by the company’s history “responsible growth” appears to have something to do with seeing their name appear on every stock newsletter and alert possible; it has nothing to do with actually becoming a mining company that produces gold, silver, copper, etc.
For investors who just want to see the numbers a quick look at POTG’s most recent quarterly filing should tell them the direction of the company. For the three months ending August 31, 2011 their net loss from operations exceeded $24.4 million as compared to a net loss of $7,168 for the three months ended August 31, 2010. How does a pre-exploration stage mining company rack up a net loss of $24.4 million in three months and not be any closer to production?
In an almost laughable section of their quarterly report POTG provides investors with what their anticipated financial needs will be for the fiscal year ending May 31, 2012. These needs are “based on meeting our known obligations for general operations, required property payments and for planned exploration activities.” Suffice it to say, POTG has no business being in operations long enough to actually necessitate these funds.