We found an interesting article titled “The Money Pit and Ultimate Death Spiral of Small Scale Mines – A Rant” written by an 35-year industry insider, Brian Buss, P.Eng., PMP. The original article is located here on LinkedIn, but we have saved it as a PDF located here.
It shines a light on the scripted and predictable process of the junior miner business model.
We would call this guy Nostradamus, but he has seen it before. Do any of these excerpts from the article remind you of a certain Canadian exploration company?
“a CEO, CFO, VP Exploration, various other staff, and a Board of Directors even before it has significant funding in place to actually do any exploration work”
“a highly motivated group of people that will do just about anything to find something (anything) that can be held up (hyped up) as a potential mineral deposit and an eventual producing mine”
“now has investors and share holders who will be demanding rapid return on their investments”
“Nowhere is this money circus more in evidence than at the annual Prospectors and Developers Association (PDAC) Conference held annually in Toronto.”
BTW….. Look who is going to the PDAC
More excerpts from the junior miner instruction manual continue (from the article)…
“will have a booth at the PDAC. Here the senior executives and exploration geologists will meet with service and supply companies, lawyers, and potential investors”… “they will be looking for a merger or take over target.”
“Every small piece of activity that is in the least bit positive will be hyped up to demonstrate that the company is well along in its plans”
“Drill intersections will be quoted of “select holes” with ridiculous grades over un-minable widths… Bad news and difficulties will be universally softened for messaging, not fully disclosed, or covered up completely. Any disappointment will be met with the standard approach – we need more drilling”
“professional geologists and geological consultancies who are quite comfortable selling their professional reputation and signature to give the client the answer they are looking for – all for a hefty fee”
“hire a compliant (or complicit) engineering company who will be more than happy to run up some form of engineering study (PEA, PFS, and or FS) for a fee. Often, the result is a reverse engineered mine design”
“the fundamental business objective is not to actually open a mine, but it is really to hype up and sell off the resources as quickly as possible and to make everyone in the company as rich as possible as soon as possible – Bump it and Dump it“
We could go on but don’t want to ruin the ending…
PS… A new 52-week low.
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