By: Dylan Sikes - AllPennyStocks.com News

Tuesday, September 9, 2014

Junior miners have had a tough go of it in the last few years, with a glut of mineral explorers fighting for limited funding to advance their projects. This is partially exemplified by the junior-heavy Toronto Venture Exchange languishing while other North American exchanges are printing new record highs, including the Venture’s big brother, the TSX Composite. Sure, there has been a spate of developmental firms panicking and forced into less than perfect financings to keep their doors open, but there are other companies that have not only kept their heads above water, but also positioned themselves for additional growth. Gainey Capital Corp. (TSX-Venture:GNC) has had a terrific 2014, rising from 14 cents at the start of the year to a high of 54 cents per share in July. The stock is still holding nearly all the year’s gains, trading on Tuesday as 52 cents after closing Monday at 50 cents. Headquartered in Vancouver, the junior miner hub of North America, Gainey is a gold and silver exploration, development and ore processing company exploring an aggregate of 18,766 hectares located in the gold/silver-rich Sierra Madre Occidental Trend in western Mexico.

The location of it flagship El Colomo property is alluring enough to warrant a look at the company, given that the Sierra Madre has long been known to be rich in gold and silver. Majors and mid-tier companies surround the property, including Goldcorp. (TSX:G), First Majestic Silver (TSX:FR), Chesapeake Gold (TSX-Venture:CKG), Primero Mining (TSX:P) and Great Panther Silver (NYSE MKT:GPL).

El Colomo is still largely unexplored, yet a highly prospective property with district-scale, multi-million ounce gold potential. High-grade targets abound at El Colomo as measured by historical exploration, including the La Nueva Victoria vein, which has a historical drilled inferred resource of almost 500,000 tonnes at an average grade of 6.7 g/t gold and 353 g/t silver containing 95,000 ounces of gold and 5 million ounces of silver. The La Higuerita zone has a historical geologic resource of 20 million tonnes at 1.37 g/t gold equivalent. Both zones are still open along strike and at depth. Renowned geologist Peter Megaw has been engaged by Gainey to spearhead the exploration work at the property.

Where other juniors have fallen short on cash or run themselves deep into debt (or crippled their share structure), Gainey Capital is in a solid position, with roughly $3 million in cash, no debt and 43.3 million shares outstanding. Further, the company owns the only mill in the region that includes a gravimetric/flotation processing center, which optimizes gold and silver recovery rates. With the litany of miners around, Gainey’s mill appears to be in demand, which will provide revenue that can be utilized to fund exploration efforts at El Colomo.

The revenue is starting to come in, with Gainey announcing on Tuesday that it has received US$240,000 in deposits from independent, private mining companies. The company says it now has several months of ore from regional mining companies stockpiled at the mill.

The Gainey mill, which is run by George Cantua, who previously supervised Barrick Gold’s (TSX:ABX) 24,000 ton per day mill in the Dominican Republic, is currently capable of processing up to 300 tons of ore per day. Gainey Capital chief executive commented in a statement today that the company has “the ability to upgrade the mill to 600 tpd with minimal incremental capital and without any need for additional permitting.” This sets the stage for Gainey to ramp up its toll milling of third party ore, generating more cash for exploration and eventual mining of its own ore at El Colomo, perhaps within the next year. In short, Gainey’s experience and prudent management has aligned the company – which still only sports a market capitalization of around $21 million – for continued growth going forward. Proper due diligence is, as always, encouraged.

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