Coal Mining In Columbia: VSUS Technologies (VSUT)

Shares of VSUS Technologies Inc. (OTC: VSUT) have been relatively quiet for awhile now as this tiny floated penny stock awaits a Columbian mining permit. VSUT stock price has been as high as 0.068 in mid-May, but has not seen much volume traded since around Valentine’s Day. When John Campo, CEO of VSUS, addressed shareholders on May 31, other than updating about the awaiting permits, he did hint that they were currently in talks with a company that owns producing oil wells in Wyoming. (see here)

Approach: Day Trade / Swing Trade / Long Hold

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VSUT Stock Chart

Market Cap: 2.50M
Shares Outstanding: 58,244,247
Float: 9,086,103

5 Day Pct Change: 0.00%
5 Day Moving Avg: 0.0476
5 Day Avg Volume: 15,960

20 Day Pct Change: 42.86%
20 Day Moving Avg: 0.0451
20 Day Avg Volume: 54,605

A few weeks ago, VSUT increased the authorized shares of common stock 100 Million to 500 Million. This is a clear indication that some form of acquisition or financing arrangement is about to occur.

The Company projects 30,000 tonnes of coal per month at their wholly owned La Tabaquera coal mine the first year of production. That number is subject to increase if they can close a deal with one of their shareholders on the adjacent property to La Tabaquera.

According to Campo: Worst case scenario is that VSUS sells mostly thermal coal at the mine’s gate to local buyers and pockets $17 million in revenue with a $4-5 million profit the first year of production. If work units are added, the numbers increase. Originally, coal production was forecasted to be 1,000 tonnes per day using one work unit. One work unit is comprised of an excavator with a 2 ton bucket, a loader, and five 32 tonne dump trucks.  Increasing production with additional work units would mean increased costs estimated at  $1 million which could produce $3 million per month, assuming metallurgical coal sales at the mine’s gate are fixed at $100/tonne.

Some points to consider about VSUS Technologies

• VSUS owns 100% of La Tabaquera mine in Colombia with an estimated 17 Million tonnes of reserves, 70% metallurgical and 30% thermal coal. Appraised Value: $70 Million, taking into account a maximum of 70% exploitablity, $49 Million
• The Company signed an LOI to purchase the neighboring property with expected reserves of over 100 Million tonnes
• Brazilian miner Vale SA, the cheapest of the world’s 15 biggest miners relative to earnings, recently agreed to sell its thermal coal assets in Colombia for $407 Million to a unit of Colombian Natural Resources, a mining company controlled by the U.S. Investment Bank, Goldman Sachs (see here)

About VSUS Technologies, Inc.

VSUS Technologies is a growing company specializing in acquisitions of revenue generating businesses. VSUS acquired a mining concession (see here) by the name of La Tabaquera in Colombia. VSUS will have three revenue producing business units in Colombia: coking and coal mining in Guaduas, Colombia, docks and river transportation along the Magdalena River, and a coal export terminal on the northern coast of Colombia. The Company is also exploring allegiances with U.S. universities to study capturing Coal Bed Methane (CBM) in Colombia. The company moved into the coal industry in Colombia in 2011 due to the rising prices in oil.

For more information about VSUT, click here.

Bottom Line: One point to consider about this penny stock is that since volume has been low to non-existent for some time now, there would be fewer sellers than buyers if VSUT was to breakout. That said, approach it correctly since a high volume day could leave a ton of buyers holding stock they cant sell.

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