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A 'Miner' Problem, $2 Billion In Negative Working Capital

Tyler Durden's picture




 

Via Visual Capitalist,

In a lengthy bear market for mining stocks, there have been repeated calls by pundits for the culling of hundreds of companies that have been unable to raise new money or generate shareholder value. This piece of the capitulation process, some say, is what is needed to put confidence back in the market so that the bull cycle can start again.

 

 

Courtesy of: Visual Capitalist

 

 

Tony Simon, President of Seguro Consulting, has put together a report that has rather concerning findings for those interested in the venture markets. The chief finding in his report is that there are 589 companies (roughly 40%) that should no longer be listed as they do not meet the continuous listing requirements required by the exchanges.

As per Policy 2.5 in TSX-V document:

Working Capital or Financial Resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months.

However, these nearly 600 companies still remain listed, which helps generate fees for a variety of service providers including legal companies, auditors, and listing fees for the exchange themselves.

*  *  *

The full worksheet of 589 companies and commentary can be found here and here.

 

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Sun, 03/29/2015 - 18:53 | 5940224 Bossman1967
Bossman1967's picture

Since when did a posive capital requirment keep anything from being the whole world oporates on negative capitol only the common person need worry about being broke

Sun, 03/29/2015 - 19:12 | 5940264 mickeyman
mickeyman's picture

Besides, the market isn't there to benefit shareholders . . .

Sun, 03/29/2015 - 19:25 | 5940287 philipat
philipat's picture

The Managements of these Companies have all been prepared to sit back and watch the CB's/BB's artificially crash the prices of PM's with "Paper" and not call them out whilst physical demand from China and India alone exceeds total Global production (Ex-China). With COGS well above the "Market" price of paper Gold, even with lower energy costs, there is clearly no interest in their shareholders. So, IMHO, it couldn't happen to a nicer bunch of Guys........

Sun, 03/29/2015 - 19:41 | 5940327 Hal n back
Hal n back's picture

miners should  take accounting  lessons from tehebankers.

Mon, 03/30/2015 - 07:24 | 5941209 BoPeople
BoPeople's picture

Mining companies are competition for bankers. Mining companies create real assets, while the banks create debt. The world can use either in trade.

The banks like it better when those producing real assets are enslaved to them with debt.

Sun, 03/29/2015 - 19:55 | 5940360 Usura
Usura's picture

If you still have any failth in these "managements"  just take a look at the recent appointments to the Barrick advisory board.

Sun, 03/29/2015 - 22:58 | 5940811 blowing winter
blowing winter's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobs-review.com

Sun, 03/29/2015 - 18:59 | 5940235 Fun Facts
Fun Facts's picture

and return on capital is at a 40 year low.

all consequences of central bank gold price manipulation.

wake up mining assholes before you're working at burger king.

Sun, 03/29/2015 - 22:14 | 5940716 cnmcdee
cnmcdee's picture

Why is that? 

 - Because we reward contraction - not expansion

Interest rates determine the growth rate of the saver and the contraction rate of the borrower - just that simple

Sun, 03/29/2015 - 19:06 | 5940246 docinthehouse
docinthehouse's picture

How do you find this stuff?? 

Tyler, you are amazing!

Not brown-nosin' but this is an amazing blog.

Mon, 03/30/2015 - 07:25 | 5941210 BoPeople
BoPeople's picture

Chuckle ... how indeed.

Sun, 03/29/2015 - 19:06 | 5940247 docinthehouse
docinthehouse's picture

How do you find this stuff?? 

Tyler, you are amazing!

Not brown-nosin' but this is an amazing blog.

Sun, 03/29/2015 - 19:42 | 5940330 pakled
pakled's picture

A double post lends doubt to your non-brown nosing claim.

 

 

(just joshin'. I snatched up those links lickety-split)

Sun, 03/29/2015 - 19:06 | 5940248 duo
duo's picture

If the PTB want you to produce PMs at a loss, you continue to do so.  It's the free market in action.

Sun, 03/29/2015 - 19:11 | 5940261 Quinvarius
Quinvarius's picture

No way dude.  The bankers picked the correct price to sell everyone else's gold.  It is impossible that they would empty all the vaults of assets they are holding for others too cheaply.  They are too smart for that.

Sun, 03/29/2015 - 19:38 | 5940314 Bay of Pigs
Bay of Pigs's picture

A "free market in action"?

That might be the dumbest things I've ever read here in five years. Especially in relation to precious metals like gold.

Sun, 03/29/2015 - 22:16 | 5940720 duo
duo's picture

I was being sarcastic.  I guess some took me literally.

Sun, 03/29/2015 - 19:15 | 5940267 oudinot
oudinot's picture

I am involved in a few companies that are on the list and a few that are not.

Many of these undercapitalized companies have wonderful mineral assets but no exploration moaney becuase of the low price of commodities as well as the low investor interest.

Quitting now would be stupid; why would one quit at the bottom of the cycle?  It is preicsely the time to purchase mineral assets, as they can now  be bought for a song.

One should buy when the blood is running in the streets, and sell when everybody is partying,dancing  at the saloon.

Sell Apple, buy a low priced miner with a good property with  sensible management whom own  large equity stakes in the firm.

 

 

Sun, 03/29/2015 - 19:28 | 5940291 kowalli
kowalli's picture

and if it is not a low price, but a high price  and they will go even lower?ROFL

Sun, 03/29/2015 - 19:57 | 5940363 actionjacksonbrownie
actionjacksonbrownie's picture

Here is a long term chart of the xau/gold ratio.

 

http://www.macrotrends.net/chart/1439/xau-to-gold-ratio

 

The ratio was range bound for at least 25 years, but in 2008, war was declared on the mining industry. If you think the gold price is manipulated down, then beginning in 2008 the mining industry as a whole was even more aggressively sold. I suspect that the goal is to bankrupt as many miners as possible (producers and explorers) in order for the monied folks to sweep up the best operations and properties for peanuts. Once the transfer of ownership is complete, only then will will see gold rise in price substantially.

 

 

Sun, 03/29/2015 - 23:22 | 5940868 Free Wary
Free Wary's picture

+1 for link to macrotrends, one of my favorite sites

I have been able to find only two companies in the PM industry that  I feel good about buying, and I'm not saying what they are until my allocation to precious metals equity is full.

Mon, 03/30/2015 - 09:06 | 5941418 Mi Naem
Mi Naem's picture

C'mon, you can tell us.  We won't tell anybody. 

Mon, 03/30/2015 - 00:14 | 5940934 QEbubble
QEbubble's picture

For fun, check out the insider buys for Belo Sun mining - BSX.TO

That CEO has been buying and buying non stop.

Mon, 03/30/2015 - 01:03 | 5940983 hedgiex
hedgiex's picture

Don't try this snake oil pitch. How many of these "assets underground" companies have no so called hedging contracts for their future production.

Go read mild meltdowns of the past where miners have fanciful derivatives that are tied to multiple times of their production. A physical stock of goods girding the pyramid of papers/claims are so well known even to the street peddlers in Shanghai.

In deformed markets with collapsing price discoveries, the daily price of commodites is just the fear and greed nanosecond blips on trading screens.

At least Apple's price can be still discerned by Consumer Behavior.

Sun, 03/29/2015 - 19:18 | 5940279 Clowns on Acid
Clowns on Acid's picture

Most of the miners are a hole in the ground qith a liar on top.

Most of the tech companies are a hole in the privacy laws with a data mining liar on top. 

Sun, 03/29/2015 - 19:18 | 5940280 JustPrintMoreDuh
JustPrintMoreDuh's picture

No problem, just print more of the precious ... oh wait.

Sun, 03/29/2015 - 19:18 | 5940281 stateside
stateside's picture

Instead of killing off 589 jr explorers how about 589 banksters responsible for keeping the gold price below the cost of production?

 

stateside

Sun, 03/29/2015 - 19:26 | 5940289 Bay of Pigs
Bay of Pigs's picture

And therein lies the rub...

Yikes.

Sun, 03/29/2015 - 19:31 | 5940300 Catullus
Catullus's picture

By the time the price of PMs are high enough to extract, the cost basis will have moved up because of the lack of water available. I own junior miners and I hate myself because of it. I figure they need to reach the point of full blown retard before they start going up. A la social media stocks.

Sun, 03/29/2015 - 19:36 | 5940313 pakled
pakled's picture

< YES

< NO

 

Finally a good time to buy into the miners

Sun, 03/29/2015 - 19:41 | 5940328 Jonesy
Jonesy's picture

I'm going to wait until miners go down 120% from the 2011 top before I start to do any buying.

Sun, 03/29/2015 - 19:44 | 5940315 razorthin
razorthin's picture

Jailing of manipulatiive central bankers and their operatives is actually what is needed for an new bull cycle.  In the mean time, I am in and out of them as needed.  Switching in and out of NUGT and DUST has been very profitable.

Sun, 03/29/2015 - 19:49 | 5940334 Jonesy
Jonesy's picture

Let's face it, gold is worthless, at least in the US.  I would note that talking about a two or three billion dollar working deficit in a world of bajillions seems kind of trivial, especially spread over 600 companies, but apparently shares trading near zero is not yet enough.  Let the cleansing begin!

Sun, 03/29/2015 - 19:48 | 5940338 pakled
pakled's picture

Damn.. I've got 10,000 shares of Arian. The company's way into the red. Bought the shares with dollars... now worth cents.

Sun, 03/29/2015 - 19:58 | 5940364 q99x2
q99x2's picture

Not enough people BTFD

Sun, 03/29/2015 - 20:24 | 5940451 ThroxxOfVron
ThroxxOfVron's picture

Just list them on the Nasdaq!

Ok.  How about we conjure up some Mining ETFs or slice and dice their debt into tranches and sell Mine Backed Securities into REITs or something creative?

Financial engineering here!  Get your rain soaked money losin' hole in the ground financial engineering here!!

Sun, 03/29/2015 - 20:44 | 5940499 QEbubble
QEbubble's picture

Short miners to the floor, no brainer. Stop buying the fucking dip and maybe you'll have enough money to buy Kraft dinner, Buffet will bank on your stupidity.

Sun, 03/29/2015 - 20:56 | 5940522 GRDguy
GRDguy's picture

No one explains WHO gets title when these mines shut down or fail.  That's the very same WHO is artificially grinding the commodity prices down. They want these commodities for themselves later.  Which was always the goal of The Great Red Dragon, to"own the earth in fee-simple."  Just sociopaths wanting to take everything away from everyone else. Problem is that most folks prefer the sweet lie instead of the glaring truth.

Mon, 03/30/2015 - 00:13 | 5940927 Rhal
Rhal's picture

You raise a good point. Do these miners owe money to the same people who rig the prices and would profit from their bankrupcy? I could see them writing a CDS betting on their collapse, trading paper derivatives ( like silver ETFs) and crashing them. They would skim a profit while rigging, collect on the CDS when at default, and maybe own the mining company.

Miners need to be careful who they owe money to.

Sun, 03/29/2015 - 21:41 | 5940629 InanimateCarbonRod
InanimateCarbonRod's picture

The other problem is that the compensation structure for mining executives became totally gangfucked. They became iBankers, always looking for the next shitty deal to propel their stock higher etc.  Take a look at Barrick...

Mon, 03/30/2015 - 06:01 | 5940730 lester1
lester1's picture

I'm holding my Comstock Mining shares. Ticker:LODE

 

They are sitting on 92 tonnes of gold on just 10% of their property explored in Nevada.

Mon, 03/30/2015 - 00:07 | 5940920 QEbubble
QEbubble's picture

Check out the Belo Sun mining chart. it's hammer time, BSX.TO

Mon, 03/30/2015 - 07:30 | 5941215 The Axe
The Axe's picture

Shit happens all the time....Park the CAT and close the mine..time to go to the bar. 

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