Property Development - Shareholders Pay The Bill I held SGF shares some time ago, decided I didn't like the time line I was seeing, nor the way the global economy was down trending, so I got out and actually made a few dollars. Since then I've just been watching and waiting. I view this project like any other property development. The owners, SGF, will do nothing beyond getting the property ready for another company to take over as a “turn-key” operation. That is to say, as the initial developers SGF has never intended to actually operate a diamond mine. They will do all of the ground work, from exploration to final permit issue, then let it go as a ready to build mine to a company that actually has the financial resources to set-up an operating mine.
In the mean time all of the company principles are receiving substantial salaries, and in the end their accumulated share holdings, even as a penny stock, will give them a small bonus. There is nothing illegal or devious going on here....it’s just business. If you want to make the same money the SGF principals are making then set-up your own exploration & development company and go public. As common shareholders we play the market to make money through buying and selling shares. We aren’t and never will be part owners of this company or any mine that may eventually be established and if you are thinking this way you are deluded. At any point in time SGF can accumulate sufficient debt to simply file for bankruptcy protection and in the ensuing restructuring the common shareholders will be left with nothing. If you would like to see how that works just research how Catalyst Paper (TSX:CYT) was restructured.
If you’re going to buy shares in any exploration & development company with the intention of holding long, particularly a company without any extensive history, then you will eventually lose most of your money. At this point I may purchase SGF shares again, considering them to be a lotto buy as I don’t see the share price improving dramatically before the operation is dumped by SGF. Until then the company principles will continue to receive their generous salaries courtesy of the people who purchased the original share offering, which was their main objective from the beginning. As I said the end sale of the company, if bankruptcy doesn’t occur first, will simply be a bonus for them...they really don’t care what happens to the shareholders after the shares are sold and they have the investment money to pay their salaries and perks.