JP - most juniors finance themselves by shovelling shares out the doors, IPO's, rights offerings, incentive options, or private placements. Doesn't matter which of these they use, as ultimately, the general public is putting up the money, and it is going to the treasury of the company.
This money is not earnings by the company, but rather earnings by the individuals, who in turn buy some of this new shares issued paper. Although we all tend to think in terms of speculation, I assure you that in the classical sense this is a more serious contract between me putting up some money on the basis that the company will PERFORM some good with that money.
Ashton did an initial IPO at $3 to raise about $15 million from the public, Ashton Mining Ltd of Australia also took up some shares to add financing to this. Then in the rights offering, Ashton raised another $10 million or so from the public, with Ashton Mining of Australia adding to this. None of this money was earned by Ashton Mining of Canada. So in total, Ashton has been into the pockets of the public investor to the tune of about $25 million bucks.
Now if Ashton was your employee or business partner you would be expecting something in return. And the fact that we are split up into many contributing investors doesn't minimize the obligation on the part of Ashton to return something to the shareholders that put up the money.
You are referring to the shares that are getting traded back and forth between investors and I'm not concerned about that, since it doesn't dilute the share structure.
Fact of the matter is this, for $25 million dollars out of the public purse, Ashton with 5 years or so of use of this money should be building up value in the company. And if current management don't know how to manage, direct resources, choose projects, make deals, to enhance company value, then they are proving themselves to be unworthy of the trust of the shareholders.
Now John Auston is presenting a talk at the PDAC, probably going to say we're still committed to ADP, have found another 5 pipes, but the big question is what added value to the comapany has been achieved. If the company spends another $7 million on this project and simply find another 5 or 6 pipes that are uneconomical, they will be broke with no company value, and then wanting to do another financing. Will they then deserve any more money from the public, I think not.
Look at what Southernera has done, relentlessly on the hunt for adding value to the company, always looking for opportunity, and today we even have earnings per share, but no promise of dividends yet. Look at Euro/Franc Nevada, where company growth is based on solid strategy and good management, and you do have dividends.
I consider Ashton to be a bit of a flagship company even with my remarks above, but I am concerned that they have been too lapse in the pursuit of company building projects, and probably the share price reflects this. What kind of financing we gonna do at share price of $1? Dilute the hell out of this company to do anything meaningful. |
