How not to create value for shareholders

How not to create value for shareholders

A question I often pose to CEOs when they are presenting their companies to me is, “What is your most important task?”. The naive ones (most of them) say “Finding orebodies”. Wrong!

The most important task is to ensure that their company is properly funded, for if it is not, its days are numbered. Junior companies have to be focused on survival first, and then achievement second. You can’t do anything without money.

However, it should not be money at any cost. It is no good finding gold if you keep going back to the market to raise money at ever lower prices. That is just a sure fire way of destroying shareholder value.

It is not enough to judge a company on its geological merit. It has to have smart corporate management as well, if it is going to be worth investing in.