From David Pescod's Stocktalk today... CANACO RESOURCES (V-CAN)
.345 -0.005
GOLD $1617.60 -1.60
It’s been ugly in the junior gold sector over the last while
as suddenly it is very tough to get financings done for the
junior explorers and with the lower price for gold, there
seem to be fewer gold bugs around.
Meanwhile, Danny Deadlock is attracting a lot of coverage
on one story in Stockhouse by asking some pretty tough questions about Canaco Resources.
He writes, “Every few months I come across a decision
by management of some company that simply has me
shaking my head in disgust.
Long story short, In 2011 and 2012 Canaco Resources
was a gold play in Africa that over-promised and grossly
under-delivered. Several Canadian mining analysts prior to
May had targets ranging anywhere from the mid $1 range to
several dollars.
May 15th 2012 they released their much anticipated gold
resource report. It was a fraction of the several million
ounces everyone was expecting. Following the news, large
shareholders destroyed the stock as they dumped their
positions and took huge losses.
In March 2011 Canaco raised almost $140 million above
$5 per share.
This company’s management simply validated their very
poor street reputation by issuing themselves 6 million
stock options. The management according to their own
powerpoint presentation only owns 2% of the stock outstanding
which in itself is ridiculous. Then they go ahead
and “award” themselves this huge stock option position
after a year of stock performance that (for lack of a better
term) was pathetic.
Stock options were designed to reward good performance.
Not be abused and simply serve as a method for
management to line their own pockets. Quite frankly I am
surprised there hasn’t been a shareholder revolt prior to
this that saw management replaced. Not only was the number
of options granted grossly excessive (based on past
performance) but they are good for five years (not exactly a
vote of self-confidence in your ability to grow shareholder value!).