Mining Exploration, Development & Creation of Wealth

investorpaul · 17 June 2011

Hi Everyone,

I have recently started researching mining exploration and development with a view to increasing my exposure to this sector of the stock market.

One thing that has become apparent to me is how many Directors can with minimal financial risk and exposure generate the potential for significant returns.

Is it not feasible for a person to do the following:

1. Seek private investment to purchase/establish a mining exploration lease/previously mined site.
2. Spend the private investment cash to hopefully generate some good drill results.
3. List on the ASX and seek capital to either develop that site further or purchase new exploration targets that may be further developed.

Now if you hit it big well you has the director/founder are rolling in shares and make a healthy return. If worst comes to worst and the company is liquidated you can just start the process again.

Anyway I just thought I would post this for discussion as it is thought provoking and highlights one of the downsides associated with explorers IMO. The directors have minimal risk yet the potential for huge return everyone else shoulders the financial burden.

basilio · 17 June 2011

Very astute Paul...Perhaps that is exactly why a number of serial company directors do exactly that time after time. Of course you have to be very fortunate as an investor to actually make any money.

Unless.... your special company director friend is able to tell a really good story, let you buy shares ahead of the ASX release and give you the opportunity to immediately stag your shares for a tidy little profit.

Or....you could be the investment advisor who gets to tell all and sundry why Dry Gulch Mining is going to be the next Fortesque and takes another tidy commission selling the shares.

skc · 17 June 2011

investorpaul said:
Hi Everyone,

I have recently started researching mining exploration and development with a view to increasing my exposure to this sector of the stock market.

One thing that has become apparent to me is how many Directors can with minimal financial risk and exposure generate the potential for significant returns.

Is it not feasible for a person to do the following:

1. Seek private investment to purchase/establish a mining exploration lease/previously mined site.
2. Spend the private investment cash to hopefully generate some good drill results.
3. List on the ASX and seek capital to either develop that site further or purchase new exploration targets that may be further developed.

Now if you hit it big well you has the director/founder are rolling in shares and make a healthy return. If worst comes to worst and the company is liquidated you can just start the process again.

Anyway I just thought I would post this for discussion as it is thought provoking and highlights one of the downsides associated with explorers IMO. The directors have minimal risk yet the potential for huge return everyone else shoulders the financial burden.

This happens in all sorts situations. An institutional trader can make huge bets going long sub-prime in 2007 (and they did) and make large bonuses (and they did) until it goes bust - they are keeping the bonus while the investors / bank / taxpayer pay for the loss.

And the said trader will move on to another bank, where someone things "He's learn an expensive lesson so I will hire him!".

Country Lad · 17 June 2011

Paul, the character in this article took up numerous leases during the slump when they were forfeited.
http://www.townsvillebulletin.com.au/article/2008/01/10/9728_news.html

It is interesting that this article was done without checking some facts because I had warned the editor to take care back in 2003. I had dealings with him as Byrt and Burt starting in 2002, didn't believe his stories right from the start and made a point of not incurring any expenses in the delaings. I won't comment further becasuse I understand he has been litigious. This article a year after the first one is interesting.

http://www.townsvillebulletin.com.au/article/2009/04/18/49511_hpnews.html

If he could do it then anybody could. Mind you, I assume your past would be pristine compared to Burt/Byrt/Birt.

Cheers
Country Lad

basilio · 17 June 2011

Excellent contribution Country Lad. Certainly sobering to read both stories and realise just how dodgy Mr Burt is. And shows just how careful we need to be with these floats.

I noticed that in the first post Mt Birt was quoted as worth $100m + and shares in his company RMA Metas were around $1.77.

RMT fell off a cliff in 2008... Current price is 3.1c.

investorpaul · 17 June 2011

Country Lad said:
Paul, the character in this article took up numerous leases during the slump when they were forfeited.
http://www.townsvillebulletin.com.au/article/2008/01/10/9728_news.html

It is interesting that this article was done without checking some facts because I had warned the editor to take care back in 2003. I had dealings with him as Byrt and Burt starting in 2002, didn't believe his stories right from the start and made a point of not incurring any expenses in the delaings. I won't comment further becasuse I understand he has been litigious. This article a year after the first one is interesting.

http://www.townsvillebulletin.com.au/article/2009/04/18/49511_hpnews.html

If he could do it then anybody could. Mind you, I assume your past would be pristine compared to Burt/Byrt/Birt.

Cheers
Country Lad

Very Interesting Country Lad.

I have been doing a bit of reading and it seems like this whole thing can be put together for relatively small sums of money.

If you have access for a couple of hundred K, buy the rights over an exploration area and then float the thing. Even if you don't find anything you can drag the company on for a few years and pick up a directors fee.

trainspotter · 17 June 2011

Not exclusive to mining operations either. Anyone remember Western Kingfish Ltd? (WKL) Boy did they rape and pillage the nupties. All based on a glossy brochure with pie charts and graphs. Amazing that people put money into it in the first place IMO.

Country Lad · 17 June 2011

investorpaul said:
If you have access for a couple of hundred K, buy the rights over an exploration area and then float the thing. Even if you don't find anything you can drag the company on for a few years and pick up a directors fee.

Ah yes, great shades of Pierpont.......and you should call it Blue Sky Mines NL.

For those of you new to this game,

http://www.pierpont.com.au/

Cheers
Country Lad

Garpal Gumnut · 25 July 2021

I have just returned in the Arnage from a reco down to the Birdsville track and across the Donoghue Highway and up Tennant way.

Then home to the Ross Island Hotel via the Isa and the Curry, Alpha way and the Coalfields.

Australia is wealthy and rich, and will remain so.

From Mining.

Not from selling lattes to one another nor from long jumps.

Dig and ye shall be rewarded.

I may even start a new godbothering religion.

Mine for God and Ye Shall Enter Heaven.

gg

divs4ever · 25 July 2021

trainspotter said:
Not exclusive to mining operations either. Anyone remember Western Kingfish Ltd? (WKL) Boy did they rape and pillage the nupties. All based on a glossy brochure with pie charts and graphs. Amazing that people put money into it in the first place IMO.

those who wish to learn from history should research Cudeco ( CDU was the ticker code when listed )

video presentations ( that might still be on You-Tube ) the use of a game show host ' as an ambassodor ' a fairly long and torturous adventure if you were a shareholder .

as mentioned above these tactics are NOT exclusive to mining and energy explorers , and knowing that MIGHT save you from avoidable losses , OR change your investing/trading style to suit a higher risk stock ( not everybody lost their shirt with Cudeco )

( i never held CDU but watched intently the drama .. from about 2012 until the end )

DYOR

The Triangle · 25 July 2021

divs4ever said:
those who wish to learn from history should research Cudeco ( CDU was the ticker code when listed )

video presentations ( that might still be on You-Tube ) the use of a game show host ' as an ambassodor ' a fairly long and torturous adventure if you were a shareholder .

as mentioned above these tactics are NOT exclusive to mining and energy explorers , and knowing that MIGHT save you from avoidable losses , OR change your investing/trading style to suit a higher risk stock ( not everybody lost their shirt with Cudeco )

( i never held CDU but watched intently the drama .. from about 2012 until the end )

DYOR

Cudeco! A classic Australian comedy. Let's not forget Condor Blanco. That's a fantastic history lesson and I believe there were some connections to CDU as well.

Aside from actual drill/sample results, when looking at investing in explorers I try and stay away from ones who are run by accountants, lawyers or "business men". I think ones fronted by Geologists turned investment analysis, or ex-middle executives from large companies tend to have dramatically better results, however I have no proof of this.

basilio · 25 July 2021

Some history on Cudeco. Have to say I have watched, and been fleeced by, too many promising BS exploration companies. Some are still operating but IMO exist almost solely to benefit the Directors and various promoters.

One of my hobby horses has been pointing out that stock indexes only reflect the successful companies. So indexes will generally continue to rise because the companies that do survive creep up. As companies rise and fall the index replaces the failures with new companies. However the losses incurred by the old companies were all too real but have been effectively buried.

https://www.delisted.com.au/company/cudeco-limited/

basilio · 25 July 2021

divs4ever said:
those who wish to learn from history should research Cudeco ( CDU was the ticker code when listed )

video presentations ( that might still be on You-Tube ) the use of a game show host ' as an ambassodor ' a fairly long and torturous adventure if you were a shareholder .

as mentioned above these tactics are NOT exclusive to mining and energy explorers , and knowing that MIGHT save you from avoidable losses , OR change your investing/trading style to suit a higher risk stock ( not everybody lost their shirt with Cudeco )

( i never held CDU but watched intently the drama .. from about 2012 until the end )

DYOR

I think that is an excellent point. BUT I struggle to see how it can happen. As far as I can see when companies fall over much of the stories also disappear. Original prospectuses. Ongoing promotion.

ASF is probably as good a source as any research because there is an unbroken history of comments and observations. There may also be live links to companies stories. (But I wouldn't count on it.)

qldfrog · 26 July 2021

Just be aware that these characteristics can also hide in whatever fashionable trends.. a crypto company, an AI company, EV parts in all these, low cost to establish a patent and you can start the glossy brochures..
Or whisky gin barrels etc.
Sadly i deal with these clowns via my systems as it is a game of the bigger sucker so you do not always lose ....

noirua · 5 March 2022

This link is from the UK indirect broker Hargreaves Lansdowne but should be of general interest in the Aussie mining sector:

https://www.hl.co.uk/news/articles/rising-commodity-prices-which-miners-could-benefit-most?utm_campaign=EOWSI%20Share%20Insight%20(subject%20line%20test)&utm_source=AdobeCampaign&utm_medium=email&theSource=EOSWSI&e_cti=3692125&e_ct=T&Override=1&deliveryName=DM9240

noirua · 9 June 2024

Dona Ferentes · 16 July 2024

Garpal Gumnut said:
Australia is wealthy and rich and will remain so.
From Mining.
Not from selling lattes to one another
Dig and ye shall be rewarded..
Mine for God and Ye Shall Enter Heaven.

gg

adherents are becoming thin on the ground, it would seem

from AFR:

Mining company directors tell us that [exploration] is the No.1 indicator of the sector’s health and future growth. And right now, ... dollars spent are at a record low, mirroring those commodity prices, near-term price expectations and .. headlines.

The data backs it up.

Reported exploration projects dropped 27 per cent in June compared with the same time last year, the 17th straight month of year-on-year declines, according to S&P Capital IQ Pro.

There were 12 per cent to 16 per cent fewer drill holes in the June quarter compared with the three previous quarters.
.
what a mess.

qldfrog · 16 July 2024

But look at it positively, no CO2, we are heading to carbon zero..remember this is so important....
The more our growth is negative, the less CO2, the less growth..a dream we can now share with half a million more people per year;
another 8 billions migrants and earth is saved and going carbon neutral

sptrawler · 16 July 2024

Dona Ferentes said:
adherents are becoming thin on the ground, it would seem

from AFR:

Mining company directors tell us that [exploration] is the No.1 indicator of the sector’s health and future growth. And right now, ... dollars spent are at a record low, mirroring those commodity prices, near-term price expectations and .. headlines.

The data backs it up.

Reported exploration projects dropped 27 per cent in June compared with the same time last year, the 17th straight month of year-on-year declines, according to S&P Capital IQ Pro.

View attachment 180883

There were 12 per cent to 16 per cent fewer drill holes in the June quarter compared with the three previous quarters.
.
what a mess.

Makes one wonder about shares linked to exploration.

Knobby22 · 16 July 2024

From what I've heard it's a lack of capital.

Mining Exploration, Development & Creation of Wealth

investorpaul

basilio

skc

Goldmember

Country Lad

Off into the sunset

basilio

investorpaul

trainspotter

Country Lad

Off into the sunset

Garpal Gumnut

Ross Island Hotel

divs4ever

The Triangle

basilio

basilio

qldfrog

noirua

noirua

Dona Ferentes

beware the aedes of marsh

qldfrog

sptrawler

Knobby22

Mmmmmm 2nd breakfast

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