You have to understand where these companies come from and from that source material, whether they have any brains or chances at all. You can get an inkling about this from who promotes them that you may know. Yamana was always promoted to me by people who where in "small" business, and who had lots of money. This tells me that it was a certain senior money broker crowd with a "gentry trap line" hard selling Yamana's South American overseas philosophy, dream team geologists, and super duper properties. In other words it was a synthetically derived, idealistic-theoretic company with the standard capital flight to SA idea, and this got sold to the usual contacts by some trap line with an old money contact list. A complete opposite of this idea would be Bema which was an "experiential company", built by industry roustabouts who worked their way up and which got no money respect. Bema always had a hard time raising money. They were rebuffed as rubes, or monetary weaklings and Refuse to go did nothing to help their reputation.
What drives this industry ultimately is not theory, boards, and perceptions but obvious economic viability. In other words can the projects attract mill money? This is where everybody and anybody right up to a major can fail as the money gets really flinty-eyed when the spectre of fighting real deep pocket markets, real government regulations and real foreign thieves actually rears its ugly head. Feasibilities are no one's friend.
Yamana was weak from the start. It did not sound good, with its silver dreams in Argentina. Too "miney". I know what "miney" means. It means that if you try to start a small mine from very good ore that will evidently pass a mill with a profit, the market will spew chunks. The market is about promoting stock not mining. That is also why Alamos Gold is hanging fire with great doubt as to its upward mobility. It is completely discounted and boring. No holes to drill. All their losses are alre*ady written in stone, and there can only be, according to a jaded and fearful market, more losses revealed as time goes by.
People don't really like made up stories packed to the hilt with the usual lies. They know all about the lies, false hope and promotional zeal larded over the standard promotional serving. So much so, that when they hear earnest, honest people with real knowledge making hopeful projections they wrinkle their brow looking for the evidence of promotional zeal, slick prevarication and oversimplfication, coupled with just a soupcon of the possibility that many others won't notice that, and on top of that there might actually be a hit. Can the obvious anomalies hide? Of course not.. they knows about all that science this week, since the last discovery gave it all away.. ignorance is bliss...
Pac North Capital and Bema are anti-Yamanas. I will not say that makes them likely future majors, but you can see they get further along the trail with their wild eyed schemes. They too hit the wall with money at a certain point, so they are forced into certain areas of refuge, i.e. deals with banks and majors.
So when the 'Yamanas and ultimately the Wheaton Rivers too, start to drift down, lose ability to raise any mill money, or start bleeding red ink, we come to realization of the truth of Gresham's Basic Anti-Harbinging Law of Easy Money Retention and Transfer. To wit: If money is not made or gained by a maximum degree of applied work, theft, and invention, or otherwise wrested from its former owners with the greatest effort and machination, it will tend to waste at a negative rate equal to twice maximum discount rate or more, until such time as it is no longer in the hands of its most recent owners. It is further a fact that in this process of wastage, such money will do no useful work at all, nor will any real knowledge, information, invention, or other equity have been gained by the said use of the money.
A corollary of Gresham's Law is that easy money tends to be spent in such as way as to make further investment in similar areas more difficult and less certain.
Gresham's law has also been shortened to A fool and his money need not be fast friends, as their partnership will be short.
Still others have made the observation that the most sure investment in most mining stock is a short sale.
There are still other classes of companies we can see. Thistle Mining and Queenstake are challenges as well. Different stories with different outcomes. Staggering ability to raise money. Best of contacts it seems.. Will they make it? hmmmmmmmm...
Still another type is River Gold. Limping along barely paying the bills. Good ore, good engineering, or so it seems. Could they make better money? What is the sticking point? Is it POG? Is their dream team not sharpening the blade fine enough?
Yamana's future was foreseen. Should its silver mine in Argentina have failed? Perhaps not. But it was an easy bet. As is Canico's future demise and AQI's as well. Now if the money wants to do it, they may blow wads of cash trying to get AQI, Canico and even Fancamp going. At first glance with no metallurgical work done, the ore appears to be there. Money in, money out. Easy. Too easy.
EC<:-}
