GREY:STTYF - Post by User
Comment by
zentrarianNZon Oct 24, 2013 6:17am
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Post# 21844120
RE:RE:RE:For Those Who Invested in SLW Since the Beginning...
RE:RE:RE:For Those Who Invested in SLW Since the Beginning...You're right in suggesting that NW didn't have much experience in metals and energy streaming. After all, nobody did. That's why he brought onboard (if somewhat belatedly) the best people he could find in the industry to help make those decisions. There may also have been a degree of hubris involved, based on such extraordinary success with PM streaming, and perhaps an overly optimistic view of how readily that would translate into the extremely competitive, much more top-heavy basic metals and energy industries.
But much if not most of SM&E's current state comes down to misjudging the timing in a very cyclical and macro-economicly driven industry. Things could easily have gone the other way, and we'd no doubt be singing management's praises right now. That's not to excuse the mistakes, which the company has acknowledged and will undoubtedly learn hard-won lessons from. But in my view it wasn't so much "bad decisions" as it was pursuing too much reward at the expense of keeping the risk contained, especially the macro-economic risk. (Not unlike the Oyu Tolgoi deal, which even if it turns out to be very profitable, I will still consider to have been too politically risky.)
I suspect the "lull" you refer to is in part caused by a reluctance to raise more capital until profitability (and the resultant sp) improves, and a lack of potential partners that can provide both certainty of survival and attractive terms in the current environment. In the future, SM&E is going to be a lot more conservative in choosing its partners, and presumably rely a lot less on dubious "guarantees" and clawback provisions to contain risk. That should make for a far less exciting, but ultimately more profitable investment.