What has shocked everyone was that the company was stupid enough...

What has shocked everyone was that the company was stupid enough to run its cash down to $6m, just one month’s spending at current levels. And they did so in a severe bear market. It they knew that they didn’t have enough funds to build this pond they should never have embarked on this strategy, or they should have raised sufficient funds late last year.

It was an unbelievably reckless thing to do. But the warning signs were already there last year, when they started spending shareholders funds on the chairman’s speculative projects in Canada, and gambling on other speculative stocks, like TG Metals. This was at a time when they knew the cash flow forecasts pointed to a serious problem at the beginning of this year. They put out an upbeat announcement in November in which the MD described this as “a low risk strategy”. We now know this was far from true, and they were quite needlessly taking this company down to the wire. Now it has blown up in their, and our, faces.

The whole board has to take responsibility. They already had a lot of critics last year, as it was clear there was no proper depth to management. The problem is that a lot of larger serious players will now regard Galan as simply un-investible. They will never believe another presentation or trust the company with their money. There is plenty of competition for funds. Who is going to buy these shares in volume to take this stock back up?