Frank Holmes is a very smart guy, has a piece on 'the five Ms of mining' this morning, well said outside of one bit with which i take exception -
'2. MANAGEMENT
Often the heads of junior companies are geologists or engineers who have no relationships in the brokerage business. This lack of relationships impedes their ability to generate market support.
Some of the most successful company builders in the gold-mining industry are what I call the “financial engineers” – people who have the relationships and understand the capital markets and who know how to hire the best geological and engineering teams. We tend to have more confidence investing in them.'
This is too much emphasis on the financial side imho ... sure it is necessary, absolutely essential, but you cannot forget where the whole business begins and ends - with getting metal out of rocks at a profit, for which you need engineering minds, geologists and various other engineers as the project proceeds ... how much does your average MBA office-type know about hiring 'the best geological and engineering teams', hmmm, well pardon me i think it might take one to know one ... sure there will be exceptions, money-man with the ability to pick a good geo, and vice versa, geos with considerable astuteness on the financial side ... but if you're making rules, you can't reasonably say one side is more important
This is one beauty of Kootenay, you've got McDonald for hands-on geology, Berry on the money/structure side, and they've basically picked each other so it's the best of both worlds ... without mentioning any names, there are geos who run outfits well but seem unable/unwilling to delegate the promo/financial stuff, you get great fundamentals and the stock goes nowhere ... however, the other extreme gives you a stock play you don't want to wear for long after the pump fizzles ... you have to have both
Anyway, Holmes also has this nifty graph of the classic pattern -
kitco.com |
