By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, January 7, 2015

Sliding gold and metal prices in the past few years have put some capital expenditures on hold for miners big and small. With global economic unrest and record levels of quantitative easing keeping investors more interested in large caps and other more risk adverse assets, investment in junior resource plays is at or near an all-time low, as measured by the current state of the Toronto Venture exchange anyway. The impact of fleeting investment and low metal prices on microcaps has been diverse, including serving as a talking point for some junior resource plays to jump ship and move into the marijuana business as perhaps a more valuable use of surface resources. On Wednesday, the current climate for mineral exploration and the mining sector was the driver cited as the reason for Radius Gold Inc. (TSX-Venture:RDU) (OTCQB:RDUFF) to say it is taking a proposal to investors to vote on a change of business from a Mining Issuer to an Investment Issuer. Radius currently has three projects in its portfolio: the Blue Hill Gold Project in Idaho; the Tlacolula Silver Project in Mexico; and the Holly-Banderas (gold/silver) Project in Guatemala.

Aside from its own operations, Radius has taken a stake in several other small, Canadian miners, so the idea of flipping to an Investment Issuer isn’t necessarily too far from its core competency. The company owns 2.83 million shares of B2Gold Corp. (TSX:BTO) (currently trading at $2.35); 1.01 million shares of Focus Ventures Ltd. (TSX-Venture:FCV) (currently trading at $0.18); 8.0 million shares of Medgold Resources (TSX-Venture:MED) (currently trading at $0.08) with 2.0 million warrants to buy more shares, which the total holdings would represent about 25% of Medgold shares if exercised; 9.87 million shares of Rackla Metals (TSX-Venture:RAK) (currently trading at $0.02); and, $800,000 of convertible debt of Southern Silver Exploration (TSX-Venture:SSV) (currently trading at $0.04) that can convert to up to 16 million shares of SSV, pending approval from the TSX Venture. All of these companies, much like so many other mining plays, have seen their share price depressed, but just looking at the B2Gold holdings shows a value around $6.6 million. That’s not too shabby for Radius, who only has a market capitalization of $8.67 million.

Against that backdrop, Radius’ management and board of directors believes that the ideal allocation of corporate working capital is to be a resource-focused investment company, while still keeping a few mineral projects for exploration. The company is not proposing or expecting any management changes. While investments now are currently in metals, the new strategy would encompass any natural resource commodity, including oil and gas. In the description of potential investment types, the company lists “distressed situations,” which is an interesting target demographic considering the financial position of many companies in light of the resource industry’s current environment.

In order for the proposal of a change of business to be set in motion, Radius Gold needs shareholder approval, for which it intends to hold a shareholder meeting early this year.

Shares of RDU have been on the rise since hitting a low of 6.5 cents each in early December, closing on Tuesday at 10 cents. With the news this morning, the Investment Industry Regulatory Organization of Canada Trading has halted trading of RDU on Wednesday in order to “ensure a fair and orderly market.”

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