My thoughts are that there is no doubt, in my mind at least, that OVR management has lost significant credibility over the last few years due to all the 'we don't need capital', 'we are going to be permitting Andrew', 'we are going to be in production in 2012' and successive positive feasibility studies; and then the sudden and drastic cost, capex and strip ratio blowouts.
But with three ex-bhp staff as directors they were probably being accorded more credibility than other juniors of similar ilk to start with.
Anyway that credibility margin is gone now for me and probably a few other shareholders...
That said, credibility wise they are now probably on a par with many other juniors, many or which are trading at higher premiums to cash backing. And as has been pointed out, where credibility is lacking, it can be hard to fully capitalize a company on any new project.
Of course this puts both shareholders and OVR directors in a sticky spot.
From the directors point of view: they have to pull their fingers out and prove themselves to shareholders and to the market at large, and there is little physical evidence that they are doing this atm, although the duck on water allegory may be apt.
The need to prove themselves competent could turn into a good result for shareholders if directors can deliver a new more compelling project than the yukon at a good price (low share dilution) and allow a significant rerate on that and existing yukon projects potential. But this may not happen. Certainly as has been pointed out, so far it is all talk and no action and cost are certainly not being cut to the bone from what I can see.
From the shareholders point of view: $30 million dollars is almost up in smoke over the last few years, the share price has gone from a dollar to one cent and directors still think they are doing a good job and are refusing to resign according to reports. But as a shareholder I think you give them a couple of months after that last shocker: the shelving of the Yukon to announce a new plan.
OK, so they have had a few months and not a peep so far and the AGM is coming up with the potential of the 'two strikes'.
While I would LIKE to see these directors remain in their positions and deliver a staggeringly good project for OVR and a quick return to one dollar per share and restored credibility all around, at some time you have to draw a line in the sand and say: 'you have had enough time and drawn enough fees and have not delivered a return for shareholders'.
That time, for me, is at the AGM. Time is running out for the board, and if no decent project and forward plan is announced prior to that, I would see little option but to vote against remuneration with a view to a board spill. That would give them a little longer to pull their fingers out or drain the coffers, but not much.
>>
As for the epiphany that was the shelving of Andrew; I think this was on the cards for a while (if GSCO is a yardstick), and while the numbers blowouts were shocking, in some respects OVR led the junior sector a little as other management teams are admitting to capex and opex blowouts that imperil other projects.
I have an opinion some stark and nasty facts may have been kept from shareholders for longer than needed to be the case, but it seems other companies have no qualms in keeping up their masquerades for longer.
So while I am bent out of shape over it and think permitting should have proceeded I am a pragmatist. On this front I do still have a lingering suspicion there is yet another reason we have not been told about why permitting was not progressed regardless of current project economics. I have this view because I believe, as I suspect management do, that Zn prices will be significantly higher in a couple of years that will more than offset current Capex/opex blowouts.
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