The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
When I think about it I have shares in Ecora which is a royalty company although I don't think it does gold. I think gold royalty companies are more common on the Canadian and Wall Street exchange.
If it can do a deal with such a company it would be ideal as the vetting process would give an assurance of the viability of the operation.
If it's worth £10m now and £10m is spent on equipment to up the level of production it's clearly worth more than £10m.
It's like buying a house for 150k adding a conservatory, a new bathroom and a new kitchen. The expectation is it's worth more.
But if it turns out to be a council house the house doesn't belong to you and the money you've spent is wasted and you've got no way of recovering it.
Of he could just have a genuine interest in the stock and might be interested in buying it should the circumstances be favourable.
As for not issuing the figures it's not exactly an annual report of a set of accounts we are talking about. Production is probably calculated daily. How long does it take to add up a few figures.
It's totally pathetic to see an opinion you don't agree with and instead of articulating an alternative viewpoint to make accusations of paid ramping and deramping.
Who do you think is paying for this deramping? So you think deramping is causing the price to call and not the failure to secure finance.
I think it also has another haircut coming. The last lender walked away when it found that government rules meant it couldn't create a charge over the mine in the event of non payment. It's how lenders work especially with large sums of money.
I can't believe any lender will make such a loan without such a charge.
The alternatives are persuade the government to change its stance and make ownership of the mine transferable, have a share issue or encourage a takeover of the company.
The first is by far the best choice but changing government policy isn't easy although you do have the lever of preventing job loses. The other two would not be good for shareholders.
This will probably get deleted for deramping but it's genuinely how I see it.
The main problem isn't the drill results it's that he is unable to offer any security for a loan.
It's like someone going to the bank asking for a loan secured against his house and then telling them it's a council house.
Without the finance the risk has just increased. I was going to buy some of these yesterday but then I heard that the finance was not on place. It reminded me of Sirius Minerals who had a great project that was bought by Anglo American really cheaply because Sirius couldn't come up with the cash.. I'd rather pay more when the finance is in place
The second issue is they said finance was in place and it wasn't. I don't mind problems. I struggle with misleading statements.
So I bought Thor Exploration instead.
Because they're burning money at £1m a month and the timing and certainty of them turning cash flow positive is problematical. I wouldn't loan cash even at 8% and with the risk free share option. Too risky.
All he said was what we already knew. There are dodgy people about who have evil intent and Kromek feel they have the answers. This might be true but even if it is can they make a profit out of providing the answers.
Looking at the amount going into intangible assets I think a lot of it is still blue sky research. If they survive the next six months without a cash call I might change my opinion.