What is the EFG Business Model???When will EFG be a producer??? It would be nice to know … Do we keep expanding and defining ourresources until someone buys us out??? What is the business model of EFG??
I came across the following and is aportion of an interview which I thought was a good read and and reallydemonstrates that First Gold Exploration Inc – EFG has an unclear businessmodel and this maybe the reason that the share price is where it sits:
BobMoriarty
Source: Karen Roche of TheGold Report 07/02/2010
TGR: Let's shift to some more solid ground—gold. In our lastinterview,when you were talking about juniors, you said, "The moreprojects I go to,the more cynical I tend to get. I don't believe for a minutethat every scamartist in the world is in Washington or New York City. There aretons of themin Toronto and in Vancouver, too. The basic business model of mostjuniors isflawed." Can you explain what about it is flawed?
BM: The most common business model is to raise a lot of money, spendit,raise a lot more money, spend it, raise a lot more money and spend it. Ifyoudon't run out of people willing to invest, eventually you'll have 1 Moz.,2Moz. or 50 Moz. of gold and sell out to a major.
TGR: Doesn't sound so bad.
BM: The problem is that 2,000 juniors believe they're going to dothis;there have been maybe 15 or 20 deals in the last five years.Mathematically, the odds are about 100-to-1.If the business model is to developa resource, raise money to put it into production and put it into production ata profit, that's a business model that works.
But 60% or 70% of these companies exist for the benefit of management.People with no experience whatsoever go in raise a bunch of money and have agood time with it. They have no intention or ability to actually produceanything at a profit. There is so much demand for resources, and the price forresources is so high it's created the illusion that a lot of these guys who haveno sense,no cents and no experience in running companies can succeed. They onlysucceed in running these companies right into the ground.
An ideal environment would be a company that pays its president or CEO say,$100,000a year with a boatload of options—not a quarter million dollars a year plusunlimited expense accounts plus a boatload of options, where they make out nomatter how much money they destroy for others.
TGR: So when you invest in juniors, you choose from among the 40%that have decent people trying to do something effective.
BM: Here's the deal. The mistake most people make, myself included,is focusing on the projects. It's easy to do, because you can see good ones,so-so ones and bad ones. The most money you'll lose is on the very bestprojects because you start to believe that nobody could screw up such a greatproject.But they can and they do.
TGR: So you say investors need to focus more on management.
BM:100%. That's the only thing I've learned in the last 10 years. You have to go inand ask, "Is there any chance whatsoever that these guys actually willsucceed?"
My Comments are:
I hope that EFG can quickly puttogether a quality management team that can execute a plan to get intoproduction. Period. The longer it takesthe longer our share price will sit where it is. JMHO
GLTA