Well, going further, one simple fact is - numbers don't lie.
We look at Financial Summary , and one thing that has to be considered with caution is various accounting terms that may allow deferral of existing loans and liabilities until a later date. Those should be factored in as well.
Financial Summary would typically include things such as:
Various figures from the Balance Sheet - especially major assets, cash on hand (important!!), and pending liabilities and/or loans.
Example - a company wouldn't be going anywhere fast without some working capital (cash) for day to day operations, would they? Typcially assets would include drilling and mining equipment - unless companies contract out to full service contractors.
Liabilities is an interesting issue - it could be from earn-in rights that has not been fulfilled but likely to be (positive results), owed fees for services and goods,
Included in liabilities include any ongoing litigations and what's the company's position?? If the company is likely to win - that could be a positive - likewise the opposite could be a dramatic blow to the company especially when it loses the case.
Example : Company A owned a piece of land and rents out portions of it to Company B. Company B doesn't use parts of the land so gives it back to Company A. Years go by and the area starts to look really good. Company B wants the land back - even though it's been under Company A's title/name for the last few years. Who do you think makes more sense?
Recent financings and share numbers should also be applied into the equation - more dilution to the stock will mean less value for the shareholders unless the company keeps growing!
Summary of the Corporate Philosophy and Business Plan (less than 100 words)
I know we're all investing and rock fanatics here, but I'm sure we all go out once in awhile. Have you heard of this fast food chain called... McDonalds? I hope so as it's a $65Bn Market Cap food giant. My point is though, despite their multifacted business routes - their mission statement is very straightforward.
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
If a $65 billion dollar company can only afford to do a few things well, how do you expect microcap exploration companies to do 10 different things all at once?
A company - should be focused in its efforts and stick to what they know. You won't see Microsoft (MSFT) venturing to fashion and competing with Lululemon (LLL) by making their own yoga pants anytime soon.
Why?
Last I checked, Steve Ballmer was not a Yoga enthuthiast nor did he have much experience in retail especially to the yuppy generation.
If the current CEO of the mining company specializes in explorations and has track record of success with junior companies - I would be more inclined to invest in the company compared to another CEO that was successful in management an accounting firm and wants to try his luck at digging for gold now that it's $900/ounce.
Bottomline - there must be a fit with the management and the goal of the company.
J.Taylor then goes on to ask his potential candidates to Summarize Flagship Properties, which we will get to, next post : )
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