A large hole in the ground is the sign of a historically successful mine, not a sign of a mine that will be successful for the next +10 years. WMC, ignored the potential of Kalgoorlie and instead went to Canada and threw $300M on the table in front of the board of directors of Seabright Resources. The board of Seabright could not believe their luck, accepted the offer, paid out a huge bonus to their shareholders, and closed down the company. WMC then discovered that they had bought not much more than a hole in the ground. (at the top of the boom - bust cycle).
What happened to the golden mile? Oh yes Alan Bond consolidated the operations and started the super pit. In the process, he bought out CSR mining, then paid for it by mining the gold under their office carpark, and gleaning the gold off the bricks in the roasters. Now that was just good business.
BHP directors went to the US with $500M and told Magma Copper they would buy out their operation. Again, the board of Magma accepted the offer and rushed to leave the building. BHP then found that they had purchased a hole in the ground and a rust bucket of a processing facility. (again at the top of a boom - bust cycle)
One has to ask …. WHY?
Aaah! hubris, ego at the top of a market cycle, an over reliance on past history, and lack of due diligence can be a dangerous mix.
- but I am sure that this time will be different and there is absolutely no way that the market is at the top of a cycle, and the board of SAR have earnestly done their due diligence and have fought back the hoards of other more experienced companies rushing with check-books in hand.
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