Aurcana Silver Corp V.AUN.H

Interesting perspective by Monty Guild

[Banman17]

Monty Guild is probably one of the top investors in the US, and runs his own investing firm, helping people make money, and advising others for free on JSmineset.com by offering his advice. Here is his latest on the mining industry: Posted On: Monday, August 13, 2007, 5:28:00 PM EST Monty Speaks On Cracked Pipes Author: Monty Guild Dear CIGAs, I know several guys who do pipes (private investment in public equity) such as you described. Some are hedge funds but most are not. The ones that are usually call themselves pipe funds. They are structured like a hedge fund but this is all they do. Just pipes. The ethical ones buy for the long haul. They do less deals and hope to make big returns by buying small companies very cheap and then having them grow. The unethical ones do illegal shorts before the deal is done, then if the stock runs they do more shorts and get rid of their stock for a profit long before the lock up period is over. They do a lot of pipes and try to make 10% on each one, keeping the warrants for a kicker. They are not serious long term investors. The ethical ones do substantially less deals and usually stay away from hard to analyze mining deals. They don't short until after the deal is done and short only legally to lock in profits. Often companies make them sign a document saying they won't short until a verbally agreed upon holding period has passed. The ethical ones, since they are in for the long haul, are very paranoid about management's planning poorly and not raising enough money, or getting too excited about a new line of business and having to come back to the market and raise more money at lower prices. To protect themselves from this, they demand a lot of special factors like a reset on the price of their deal if a later financing is done at a lower price than they paid within six months and equal notification of all holders once the holding period is up. Often friends of the insiders find out first and sell before others get a chance, so the ethical investors try to stop that. The ethical ones want management to know exactly how much they need to spend and not to have cost overruns. In my opinion, this does not work for mining companies where things are not nearly as predictable as some industries. Plus the cost of financing a new mining project can be huge and unpredictable. To me, the whole concept of pipes for shorter-term oriented private financing is difficult for mining stocks. Your pal, Monty Monty, I was shocked to hear that pipes are 50% profit makers for major mining bankers. Mostly likely the unethical types you mentioned act as hedge funds. To me that is just plain old hedge funds. Regards, Jim