Dear Russett,
I echo Danny Deadlock's praise for your thoughtful contribution (number 4937).
I totally agree with you that companies should keep their shareholders fully informed and most, if not all of them do. But it would be useless to issue weekly updates if there is nothing new to report. It'd be a waste of time for both the company and the recipient and within a short space of time nobody would bother to read them thereby just possibly missing a really important piece of information.
I, as a geologist and investor, would like exploration companies to institute MEANINGFUL newsreleases. Reports that state facts, preferably in a format that the ordinary investor can understand, rather than opinions under the guise of 'facts', half truths, MEANINGLESS 'facts' and, most important of all, without promoters hype.
Is it really MEANINGFUL for a company to report gold intercepts wrapped up in geological mumbo-jumbo which either baffles or impresses the ordinary investor? (See the post script below to learn how easy it is to mislead people with terms they do not comprehend).
And than there are the MEANINGLESS bordering on the MISLEADING news releases such as the one issued by Winspear (July 5, 1999) which reports a kimberlite tonnage calculation with not a mention of diamond grade. Mind you, it had the desired effect from Canaccord's point of view. The share price went up. (By the way, if there's a SI reader interested in a kimberlite deposit of 216 million tonnes please contact me. I know of just such a deposit. Oh, before you ask, no, it doesn't contain a single diamond, not even a G10, that is a semi-precious garnet).
And as this is the SouthernEra platform I'd just to like to write a few words on the Messina platinum project financing arrangements for which the Company's management has been criticised.
The financing, subject to a positive feasiblity study, is on a non-recourse basis from a South African merchant bank. The Company was unable to obtain the financing on the same terms in Canada. At present South African merchant banks are flush with money which, due to currency exchange controls, cannot be invested outside South Africa. Much to the benefit of SouthernEra shareholders.
The Canadian practice of financing junior company project is usually by means of a convertible and an element of equity (at a discount to the market price) with warrants. These are, of course, passed onto the broker's favoured clients. The broker also collects a commission of between 5% and 8% and warrants.
None of the equity element is passed onto the shareholders in the form of a rights issue as is the normal practice outside North America. This procedure gives the shareholder an option either to maintain or dilute his interest.
In my view this system should be instituted in Canada so that the shareholders are given the first opportunity to finance a company rather than the favoured few.
Best wishes,
Crudestope.
P.S. Misleading facts.
A science student in Idaho canvassed passers by on the street with a petition asking for support to ban and/or totally eliminate dihydrogen monoxide. A chemical he said was a vital component of acid rain and responsible for the transmission of 80% of the world's diseases.
The vast majority of people signed the petition. Only one person knew what the chemical is commonly called: water. |
