Well, the annual statement appears to be in most hands by now. Stock price not affected so apparently not too many surprises. A few comments, in case anybody follows this thread anymore.
Before I sound critical, remember that success hides many errors and production from the refinery and mines will make all this seem minor.
1) CMR celebrates it's 10th anniversary. Mgt. tells us that when they started they had no cash, no properties and no significant assests. Consolidated balance sheet, page 14 tells us they now have $113k in cash, 118k in term deposits, 75k in accounts receivable (from whom and how old?). Against these current assets, they have 666k in accounts payable, 370k in municipal taxes dure and a 650k short term note.
About the municipal taxes. If CMR closed on the refinery on or about Oct. 1, do the taxes of 370k represent 3 months of taxation? E.g. will the municipal tax bite be 1.2 mil this year?
The loan of 650k for one year was granted at 7.7% but was issued with compensation of 1,000,000 warrants. We are not told how these warrants operate. Say the warrant allows one to purchase a share for 50 cents, and say the average market price is 65 cents. Then a million warrants is worth about 150,000 bucks, or essentially a 20% premium on the loan. This is troublesome. If they need 5.3 million to redo the refinery then what happens, 8 million warrants for that loan?
2) Still nothing about what Agra-Simons said in the engineering consultation, other than cost to refit.
3) Management needs more compensation in the form of warrants and options. Notice of annual general meeting, page 9. Canmine currently relies heavily on certain directors, officers and key employees who are remunerated at rates lower than industry levels (reference as to usual remuneration of juniors in this market with no sales is not given)....The Board is of the opinion that the changes that are being submitted (an additional 1.4 million shares, approximately for mgt. warrants and options)will promote the profitability and growth of the corporation by facilitating the efforts of the Corporation to obtain and retain key personnel....the increase...will allow the Board to issue additional options to new or existing directors, providing an incentive for them to work in the best interests of the Corporation and to increase shareholder value.
Hmmm.
1) The board has issued 5.3 million mgt options and shareholder value has been decimated, so the convergence between issuance of options and shareholder value is not immediately apparent.
2) Getting a paycheck (or mgt. consulting fees, if not a paycheck) is not a sufficient incentive to work in the best interests of the Corporation
3) Necessary to retain key personnel. The headhunters on Bay Street are after these guys?
Page 15: Corporate governance practices. The Board shall be constituted with a majority of individuals who qualify as unrelated directors. An unrelated director is a director who is independent of management and is free from any interest and any business which could interfere, blah, blah, blah.
The Board has considered the relationship of each of the directors and determined that 3 of the 7 are unrelated. 4 of the 7 are senior mgt.
Note to all: 3/7 does not constitute a majority.
Well, I thought those were the key points. Not too much more waiting. Either they make it work or they don't. If they make it work, those who have steadily increased their holdings, either with options or by buying in the market at 70 cents, make money.
If they don't make it work, all of their options will be worthless; but no doubt, life will go on. |
