Are These Small Cap Mining Stocks Gold Mines? MXAM, CGLD & FOYJ

Small cap gold mining stocks Maxam Gold (PINK: MXAM), Cascade Springs Ltd (OTC: CGLD) and FOY Johnston (PINK: FOYJ) have been getting attention in investment newsletters recently thanks in part to a few paid promotions in various investment newsletters. That means investors should dig a little deeper into these small cap gold mining stocks to make sure they actually have the potential to produce real gold rather than fool’s gold:

Maxam Gold (PINK: MXAM) Has No Financials Available

Maxam Gold was formed in 1975 and has been involved in the mining and exploration of gold since 1985 with claims in the western United States and Nicaragua. Specifically, Maxam has gold mining claims in Arizona and Neveda and recently acquired mining operations from Pembina Limitada, S.A. a Nicaraguan Corporation active in Nicaragua for a number of years that has strong relationships with the miners and with the Government. According to various disclosures, transactions of $1k and $3.5k have occurred to mention Maxam Gold in various investment newsletters. On Friday, Maxam Gold closed at $0.0012 for a market cap of $84k closed plus MXAM is down 29.4% since late February of last year and down 88% over the past five years according to Google Finance.

What’s the Catch with Maxam Gold? Over the past two weeks, Maxam Gold has issued four press releases, including one on Friday to announce that a Canadian Company with an adjacent concession has started production and is willing to process material on a contract basis for Maxam Gold’s Pembina Limitada, S.A. Apparently, Pembina Limitada, S.A. will start processing 100 to 150 metric tons per day and will increase production – leading to revenue of approximately $700,000 per month in gold sales at an estimated cost of $250,000 along with a projected profit margin of 64%, or $450,000 per month. That sounds like great news for Maxam Gold. The trouble is, there are no financials for Maxam Gold posted on Google Finance or Yahoo! Finance – meaning its investor beware.

Cascade Springs Ltd (OTC: CGLD) Had No Cash the Last Time it Reported Earnings

Cascade Springs is a development stage company involved in the acquisition, exploration, development, mining and processing of precious metal properties with the company's operating interest including the development stage Keeno Strike Silver and Gold Property in the southern end of the Spring Mountains in the Yellow Pine Mining District of Southern Nevada. According to various disclosures, transactions of $5k, $10k, $15k and $22.5k have occurred to mention Cascade Springs in various investment newsletters. On Friday, Cascade Springs sank 15.48% to $0.355 for a market cap of $30.45 million but the stock was rising around 12.7% in after hours trading. Cascade Springs is down 55.1% since October and down 47.8% since early 2008 in off and on trading according to Google Finance.

What’s the Catch with Cascade Springs? Last Monday, Cascade Springs all of a sudden decided to issue a press release about how the company was granted an option to purchase the Keeno Strike Gold and Silver Property which consists of 12 unpatented 20-acre lode-mining claims and one 5-acre mill site claim located in Clark County, Nevada. Cascade Springs’ press release pointed out that these claims are located near the historical Monte Cristo Mine and the Keeno-Mint workings. Not mentioned in the press release but mentioned in an SEC filing is how 8,000,000 shares of preferred stock were issued and how Cascade Springs will have to pay Global Resources Search Group $500,000 by January 31, 2013; raise $2,500,000 by June 30, 2013; and spend $2,500,000 on mining exploration and development on the Property by December 31, 2014. That could be a challenge for Cascade Springs as it had no cash as of September 29th and has not been reporting any revenues.

FOY Johnston (PINK: FOYJ) Acquires a Concession in Cameroon

FOY Johnston has already acquired a portfolio of gold and diamond exploration tenements in key mineral regions of Cameroon and the Central African Republic. FOY Johnston’s wholly owned Cameroon Mines is a mining explorer and producer committed to developing strategic mining exploration and project opportunities in gold, precious gems, rare earth metals, iron ore and platinum group metals. According to various disclosures, transactions of $10k and $20k have occurred to mention FOY Johnston in various investment newsletters. On Friday, FOY Johnston sank 35.7% to $0.0009 for a market cap of $172.38 million plus FOYJ is up 800% since last May and is up 800% since last May and down 99.98% since early 2010 according to Google Finance.

What’s the Catch with FOY Johnston? Last week, FOY Johnston issued two press releases, including one announcing an agreement to acquire a concession in the Congo Craton region of Cameroon. That press release noted that FOY Johnston plans to invest between $1.5 to $5 million to develop a comprehensive operation of geological exploration with revenues per month being based on a price of $1,650.00 per ounce of gold, with an operational cost between $250.00 and $350.00 per ounce. FOY Johnston also estimates that it will produce 100 ounces of production a day with gross revenues per month being approximately $5,000,000 per month. However, FOY Johnston has reported having no cash all of last year and its not been producing revenue. So perhaps investors might want to wait for FOY Johnston to raise some cash to get any project in Cameroon going.