RE:RE:RE:RE:RE:RE:RE:Circular1. What does HD care about the share price? They get $4-5 million/year as a "management fee". For years I've been thinking the day would come when HD wants to cash out. They are getting close the retirement, so they'll be incentivized to ramp up the share price. Today we learn they have 3%? That's absurd. I thought for sure they owned a majority of the company (and I've been digging for years to figure out how much they owned). Send 'em packin . . . .
2. HD bailed themselves out of Curis Copper at our expense. We took a major dilution, and added a pile of debt at the worst possible time. For what? To step into years of litigation? Yes, Curis is a potentially great project, but we'll be fighting over it for years with a real chance it will never be permitted.
3. Aley. We've dumped $35 million into a Nobium project. Still not entitled. But the best news is that it's an $800 million CapEx project. How does that get funded? We dilute ourselves into oblivion so we can turn ourselves into a nobium company? Who wants to buy into a copper company that is pursuing a nobium project that will dwarf the copper company? Why not just announce that the company is seeking a JV partner for Aley where the company will contribute the entitled asset as its sole capital contribution, and take an ownership interest without any further capital requirements? I'd be thrilled to take a 10% equity interest in the project without any further capital funding. And we don't dissuade copper investors from investing in a company with significant further dilution to turn itself into a nobium company.
4. Have we heard a word about the Prosperity II litigation? Nothing, other than our claim to sue for damages was denied.
5. How about the Federal permit for Florence? Go back and look at the PRs. We were supposed to have it summer of 2015. Then by the end of the year. Still no permit. And keep in mind that management doesn't explain that the Federal permit means almost nothing. Not that we don't need it, but we don't have a state permit yet as it's being litigated. And then when the state permit is issued, it will almost certainly be appealed. I imagine the EPA permit will be appealed as well. And what has management said lately about the zoning case with the Town of Florence? You understand the property has been rezoned for residential use. No mining allowed. So even if all the permits come through, we can only mine the test site on the state land, which is a small portion of the overall mine. We'll have to win the zoning case to really have an operating mine. So do we burn $20 million for the test plant without having the zoning case resolved? Maybe so. I suspect the strategy is to build the test plant, show it's profitable, and show that the groundwater isn't being contaminated. Then with that evidence, go beg the Town to rezone the mine. Maybe that's the best strategy, but there needs to be some discussion of it. The average investor I'm sure is thinking that once the Federal permit is issued any day now we'll be off to the races building a test plant in Florence. How would they know otherwise based on what the company is saying?
I've been mentioning these issues to the company for the last several years. I haven't missed a conference call in at least 15 years. A company that was shareholder focused would be addressing these issues openly. More importanly, a company that was shareholder focused wouldn't have dumped our cash into these hail mary projects. Yellowhead seems to be the latest.
And yes, the copper industry is a mess, and yes the share price is a large reflection of the industry. However, addressing the foregoing issues openly and thoughtfully would have made us a much stronger company to weather this storm. Better yet, we should have a war chest of cash without having pursued these follies at HD's whim and at shareholder's expense.