Ralph,
Some of the stockholders have had their investments decreased by 80% over the last 4 years, and the board, majority controlled by senior managament rewards sr. mgt. with options and warrants. Well, I'm glad this keeps our costs down.
How about a moratorium on further mgt options until the stock shows a gain, year on year? Where is the harm in that? If these guys bring anything into production, a) they'll have options for all kinds of jobs and b) they'll be so rich they won't need jobs. As things stand now, I'm not so sure that the corporate world is eagerly recruiting them. Sunshine going under and Rio Algom being taken over is gonna put a lot of mine production, refining, finance and management guys on the market.
"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)."
Greater cash flows? Greater than what, zero? Some of us put years of savings into CMR when there were 10 million shares. There are now 55 million shares, no earnings and soon to be 110 million shares, but mgt is going to issue themselves enough options that they retain 12% of the stock. They seem to want 12%. If the investment is going to bring greater cash flow and increase the equity base [so all of us slobs don't have to worry about dilution] why does mgt need to increase their holdings [by options] to maintain 12%?
A lot of irons in the fire indeed. Time will tell, mon ami. You've got 4 senior management. One's a businessman, one's a geologist, one's the treasurer and one is basically a promoter. None of them have gotten anything into production that I am aware of [I may be wrong on the geologist, who may have gotten something into production when working for a major]. Do these 4 people have the ability to raise finance, get a refinery up and going, discover economically recoverable ore bodies and develop the ore bodies. They say yes. The market says maybe, maybe not.
I don't know about Canada, but in the US, unpaid property taxes are 'difficult.' Like the sherrif comes around and auctions your house. Banks often want 1 or 2% as a fee on a loan, but a million warrants for 650k?
The dividends on the preferred, issued to pay for the refinery are now 'cumulative'. E.g. after whatever share dilution [and it looks like a doubling], and if the refinery goes into production, then you have a backlog of 8% preferred dividends on approximately 5 million that have to be paid; so the bounce in our holdings is going to be affected by both dilution and a hit to earnings.
No obstacles? I disagree. Unpaid property taxes, short term debts and accounts payable approx 10x liquid assets, onerous borrowing costs.
If they get the financing, and if cash flow from the refinery is say 100 mil per year and there are 100 million shares out then we've got a $12 stock. It may happen. It may happen while some of our children are in college. It may happen before some of us retire. It may happen in some of our lifetimes.
It just hasn't happened yet. |
