Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

I have not really followed the mining industry until this year, but it seems like miners are selling quite a bit of stock to the public lately. Is this normal? If they believe we're in a bull market for gold, why do they keep issuing shares? Wouldn't it make more sense to take on low-interest debt than to sell part of your company if they did think their assets were about to appreciate? This along with low insider ownership in many miners has me concerned.
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Hi JoeBob,
It has me concerned as well. The same thing happened about nine months ago when the PoG finally broke out of it's trading range. The VC folks always seem to come out of hiding when 'things' promise to become profitable

Obviously, it's a tad easier for a producer to get some add'l financing when 'things' are going good and the future is bright with promise. It is, after all, an industry where each mine has only so much to offer the miner and, ultimately, new inventory in the form of reserves must be acquired to keep from going out of biznez

I try to put a lot of emphasis on a producer's management because it seems to me that in the hit or miss atmosphere of prospecting and mining the spoils of their 'finds', many of these CEO's are really geologists and engineers at heart and, imo, 'saving for a rainy day' has about as much priority to them as building shareholder value, which I believe to be almost non-existent.

Another thing that bothers me and it's possibly because of budgetary considerations, they often put old friends or industry buddies into positions of corporate importance rather than going out and getting the best man for the position.

John Chambers would prolly do 'things' a lot differently if he were the CEO of one of these 'dilution prone' producers.

I guess our job is to find the ones who do it best.

Fwiw, Bob McEwan at Goldcorp gets my vote in that regard with Wheaton River's Ian Telfer coming in second. Third place goes to the team at Newmont.

Good luck to you.