LAKE SHORE GOLD CORP 6.25 PCT DEBS T.LSG.DB

Writedowns track big real loss in share value and marketcap

[yoda2]

The write downs reflect the real losses longterm investors in LSG have experienced.  

In 2009 and 2010 LSG shares were worth about $4 each for an approximate market cap of about $1.5 billion.  Today the share price of 77cents translates into a  market cap about $350 million.  This real loss that some shareholders experienced of over $3, or 80%, totals over $1 billion.

The current write-downs recorded in LSG's financial statement are, to a large part, a delayed reaction to the real losses the market has recognized over the last few years. The write-downs in 2013 and 2012, otalling about $525 million, was the corporation catching up to the losses the market had seen and the losses some shareholders had experienced. Most of these losses, about $450 million of tyhe total write-down. represents the overpayments made by managment on the Timmins West MInes.  

We should not fool ourselves these losses are real and managemnt is largely responsible for incurring them.
The market may also seems to say more writedowns are likely in the future. Who knows for sure but that seems to be what it is saying.

Is this delay in recording writedowns indicate a possible lack of concern by management for share value and market cap?   Does the delay help to explain why none of the five top executives of LSG have risked investing their personal funds in LSG shares up to the equity ownership requirements recommended by LSG's board of directors?

The writedowns are not a good sign and It seems unfair to pass them off as a mere "non-cash' charge for they represent a real loss of value.