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Gold/Mining/Energy : Canmine resources
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To: Marshhawk who wrote (2686)8/25/2000 6:59:34 PM
From: Ralph Kern  Read Replies (1) of 2769
 
Read the annual report yesterday.
I am not troubled by executive options. That is the best way to ensure that management is not faced with 'agency' problems. As shareholders they have great financial incentive to maximize shareholder value and keep expenses down to a minimum. When management are not equity holders their incentive is to increase the size of management.
Refinery financing with equity will cause share dilution, this may be preferable to debt at this point, and I understand this has been accomplished with adequate trade restrictions and protective measures. If the investment brings greater cash flows then the increase in the equity base would be more than offset. One would have to know the incremental increase in cash flow realized by owning the refinery(as opposed to selling milled low concentrates or building a refinery from scratch which would increase the cost of equity by delaying the resulting cash flow) and then calculate the marginal change in cash flow/share(or $ of equity investment). My crude estimates suggest this was a brilliant corporate move.
Canmine has a lot of irons in the fire. That's the only way to go. If cobalt and or nickel prices spike up, it would be better to process the higher yielding commodity. Sounds like Canmine has that flexibility and this may be further extended by installing a third autoclave. The engineers working on the plant are the class of the field.
So we wait. I don't see any obstacles at this time as long as nickel and cobalt prices remain strong.
Ralph.
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