RE:RE:Ernesto, CUU and DCOPThanks, MoneyK, you are right about the date but I did not want to tell the whole story in my initial message, it would have been too long and not directly related to my opinion piece. I will explain my ideas better to you here:
1- I totally agree with you, Ernesto saved CUU and he deserves our greatest respect. CUU was created around 2002 and its first CEO blew 16 million dollars on Schaft Creek when the firm only had 12 million dollars in the bank! Then came the 2008 crisis and CUU was bankrupt. A trucking company was going to foreclose CUU and sell Schaft Creek but a Mexican billionnaire called Ernesto Echavarria came to the rescue, out of the blue. His family made a fortune in the gold business in South America and he was involved in the fruits and vegetables sector himself. He offered 5 million dollars to CUU if shareholders could raise one million dollars themselves, and he wanted the same terms as the shareholders, which was quite ethical of him. That is how CUU was saved back then and I acknowledge his actions.
2- But, from that moment on, Ernesto was in control with more than 52 % of Copper Fox Metals and he never lost that grip on the firm. He makes the decisions FOR the board of directors, you need to understand this. Five people sit on the board: CEO Elmer Stewart, Ernesto, a representative from RBC, the B.C. lawyer and one other person. Ernesto is the majority shareholder (54 % now, I think), nothing goes through without his approval or disapproval. Since 2009, every move that CUU made came with a price for shareholders: more shares to Ernesto for every penny that he invested in the firm. That in practice is called DILUTION. Yes, he guarantees money to CUU but you and I lose value on our holdings each time he gets a private placement. That said, as long as the projects run and the growth of the firm is assured, usually, shareholders don't mind a sugar daddy like that...
3- However, the stock price fell from above $ 2.69 in April 2011 to 6 cents last May... we as shareholders have the right to judge him now with new eyes. This Spring, for the first time in 11 years, he did not fully subscribe the private placement, something he had always done in the past. He usually takes all the outstanding shares left in the financing, if any are available. He did not do this a few months ago, which came as a surprise since CUU had also lowered the pricing just for him. You must understand that the board voted to lower the offering because of his request, he is the majority shareholder. Then, even lowered, the private placement was not fully subscribed by him. Strange, isn't it? Most people did not notice, I guess, but a few of us certainly did. Ernesto still acquired 75 % of the private placement (over 21 million shares) so those accelerated warrants are mostly his.
4- When you waiver the accelerated warrants, you stop the growth of CUU at a crucial time. We need that money NOW, we cannot waiver 2.5 million dollars at this moment: mining companies are re-opening projects, starting exploration programs, buying and looking for potential new mines, the whole sector is alive again after 8 long years! This is the perfect timing to have CUU in the game! Sadly, Ernesto forced the board to waiver the warrants... why? We have to ask the question. Based on his two irregular behaviours in 2020, one could assume that Ernesto is seriously strapped for cash, that maybe COVID-19 truly impacted his financial situtation and that he cannot put more money into CUU these days. It is possible that Ernesto wants TECK to pay for the NI 43-101 but as I wrote earlier, TECK can outlast CUU for decades.
5- Why would shareholders wait and see no new value in the stock price for months or even a year just because Ernesto has a rift with TECK or a lack of cash? He got his warrants, he got his 6-cent shares, but it came with a commitment and that commitment is due now. The market spoke and gave a huge volume average in June-July that triggered the accelerated warrants, the little shareholders/brokers/flippers/shorters even (!) played their part and backed CUU by raising the stock price to 20 cents. It's Ernesto's time today to pay but he does not have enough cash, maybe, or other motivations that are unknown to us.
6- Well, too bad! He diluted us, he acquired more power in the firm with those warrants at such a low price and especially a high volume that most of us, little shareholders, cannot afford to subscribe to. Pay out, Ernesto, pay out the firm so CUU can have some strategic money to move things ahead, to influence TECK, to develop Arizona, etc. He is the one who reversed the warrants, he did not want to pay now what Elmer Stewart published initially with the accelerated timing. So, Ernesto's action against the warrants is detrimental to the benefit of the firm, and to all of us, shareholders. We need that money now and we have quite a use for it, if you follow the plans of the firm and its goals. Bagholders, long term investors, insiders, even flippers and retail investors also deserve to see the stock price rise soon. Enough waiting, enough is enough.
7- I cannot tell you anything more on the legal action. I just hope that CUU will smarten up and change its decision about the waiver because it means a lot for the material future of the stock price. If not, you will read it in the press releases.
8- I will end my statement by saying that I would not call his actions entirely unethical so far, but it's close. I prefered the term "lack of good corporate governance" or behaviour. We will leave it at that for tonight...