How I would manage BPM.
We all have an idea on how we would manage a company, but it’s a lot harder than most of us think. Here are my personal simple thoughts on how this company is being managed to the “detriment of the shareholders”, and how I would manage it if I thought I could get a better “return” for the shareholders.
First: Just a few points of what I think this management team is capable of doing that is “not in the best interest of the shareholders.”
- The directors would issue more shares, (so that they could get more options). They could give lots of logical reasons for this decision but none of the reasons really are in the best interest for the shareholders and that is: to do whatever it takes to: “Not dilute the shares”.
- With the current down- turn in mining stocks and the result that money is getting harder to raise, and with a lot more information by way of the internet: there are lots of real good buys in the mining industry today and for the next year. It seems to be getting harder for juniors to raise cash, so the directors would choose to use their cash to buy up other good properties. The problem with this is the directors would again chose to dilute BPM shareholders profit into another project which may or may not pan out, with the result that the directors do not really know how to build the value of a company for its shareholders.
- The company would start giving (paying) the directors as many perks as possible, even if they don’t own any shares in the company. They would also re- price the options down so that the directors can make more money.
- They would expand the mill production beyond what can be paid out of cash flow, so that more shares get issued.
- Then they would drill and explore more than we really need to right now, rather than working on making more money.
- They would waste a lot more money on reports and studies which gives no benefit to the shareholders. I remember in years way back, that the original study at Sedar of 2 Dec 2002 said that they could not easily prove up a resource in this green stone, (page 44 under comments on resource definition) “The adage drill for structure, drift for grade” and “as such resource definition is very costly and for this reason many large gold mines operated for tens of years and carried only two years proven & probable resources at any one time.”
The point of the original study suggests that you would just waste money trying to prove up a resource with this type of narrow veins and high grade pockets, even though there is a very high probability that there is plenty of gold to be mined. What are they doing wasting more shareholders money on studies that we don’t need trying to prove that we must issue more shares that we don’t need, to raise money that we don’t need. To issue more options that we don’t need.
Oh, I forgot they think they own the company. News bulletin the shareholders own the company, and the directors are supposed to be working for the shareholders, not themselves.
This is what I would do to increase shareholder value
(The company needs to think outside of the box not like many other mining companies that raise funds, find a resource, mine it all out and the stock goes to nothing, and pay no dividend and the original shareholders get nothing unless they sell at the high. There are very few companies out there that have the potential to do what BPM can do)
1) keep costs as low as possible (keep directors fees to a minimum unless they are on site working for the shareholders)
2) I would work with what production we now have and try and squeeze a little more without too much cost, to show as much profit as possible, and sell all the gold produced to show profit. We are in the mining business not in the gold investment business.
3) I would issue a news bulletin that we are going to start paying a dividend in 2013 from profit. There is nothing that gives confidence to shareholders more than a dividend. When confidence has been totally shot, and you want to change that negative attitude, you need to start treating shareholders with respect, and the best way is to issue and pay a dividend. Period!
This would change the dynamics of this company from being a normal junior that sucks shareholders dry to one that would be respected above all the other juniors, rather than one that is despised.
BPM can make at least 5 million and up to $8 million a year in + cash flow and so with a little effort and a dividend of 20% or $1million is very doable. Say 2013 at .03 and then 2014 at .05. (Not likely to happen as too few directors have shares to benefit from this and would argue and vote against it to their detriment.)
4) I would remove any directors who do not believe in this company (the ones who think this company is too high a risk and do not believe in what they have and so they have no shares in the company, just options, and “options” have very little risk at all to the directors) Bill is the only insider who has been buying shares in the market for the last few years. With this attitude from the directors why would new shareholders buy into this loser company?
5) I would set out a future company plan that uses excess cash flow from mining and state that in 2 to 3 years we will increase production by using our own cash ( No dilution, no borrowing). This company has the potential to do that! The company right now can produce a low of $400,000 per month in cash flow and that could be increased with a little effort to get to $650,000 a month with no dilution.
6) When these things have been done and the share price is a lot higher everyone wins. Directors should understand this (as well as the shareholders) who are really the individuals who own the company.
As I am just an individual shareholder these are just my personal opinions.
Do I think we have a chance of any of these things happening for the benefit of the shareholders?
Not very likely.
Do I wish the directors would start to do the right thing for the shareholders,
You bet I do!.
JIMHO