All,
This is the first and most likely last time I will be posting here. I attended one of the information sessions this week and got the chance to meet RM who I had never met and talked to before. Before everybody starts judging my opinions below, I must say that this is purely my own opinions and those are not judging people as individuals but as business operators/shareholders/owners.
Following one of the sessions I must admit that I was less than convinced by RM arguments in terms of future plans for the company. No set plans for financing, no set plans in the short term while awaiting information about formally applying for the lease and no set plans to reduce expenditure and maximize cash flow.
Yes, a lot was said about how he thought that we would be mining within the year and hopefully sooner than later (his words). “Hopefully” should never ever be used in the business world. A fine business man should know that. He also mentioned that 2-3 months post approval should be needed to start mining. We all know how giving timeframes to shareholders should be carefully done. His track record for such thing is average to poor.
In regards to the exploration of San Jorge and justifying slow progress there (and elsewhere as a matter of fact), he used excuses of how everything is difficult in the Solomon Islands from having to push tracks in, clear pads, Community Affairs, little existing infrastructure, etc. Well, all those things are incredibly standard in terms of mining in third world countries. This is experienced by every single mining project in the world at exploration and project development phases. Using this to justify the current situation is simply a poor excuse and is a reflection of current management. Many mining projects have successfully transitioned from exploration to operation in similar countries such as PNG, Fiji, New Caledonia, etc. Axiom is not facing problems that have not been faced in the past by others despite what is being said.
Yet, the General Managers of such successful operations are not paid $700K a year. Question of RM salary was raised today as well as his intention of taking a pay cut. Answers were that he had thought about it but nothing had been finalized which to me means that it will not happen. Cash flow is tight and his huge salary is simply a waste of cash for the company and could be/could have been invested in much better ways. RM tried to justify his salary by saying that no executives were willing to relocate to the Solomon Island, that the place had Zika, Dengue and Malaria and that the taxation was very high. Well, most mining countries have parasite infected mosquitoes, tax in Solomon Island is higher than Australia, yes, but even if it was as high as 50% he would still clear $350K a year which would allow him to live more than comfortably in a country where everything is cheap. But, more importantly, he chose to go there and his partner is a local of the Solomon Islands. That was a "tough” choice indeed.
People will take his defense and say that no one could have seen that court case coming. Well, that is not correct, RM admitted that during the application process in 2010 (excuse me if the date is wrong) that a few steps were not correctly undertaken by the government (2 or 3 out of 15 - RM words). Any other company would have been on top of this kind of paperwork as this is the most important legal document that a mining company can have. This is called due diligence. To me, this whole process has been poorly managed by Axiom and RM.
On the same topic, it is interesting comparing companies market capitalization vs their CEO salaries. For instance: If Sam Walsh (Rio Tinto CEO) was the AVQ CEO but were to apply his current Rio Tinto market cap/salary ratio to the AVQ market cap, he would then only get paid $10,000 a year managing AVQ. Similarly, If RM was the Rio Tinto CEO but were to apply his current AVQ market cap/salary ratio to the Rio Tinto market cap, he would then get paid around 750 million a year managing Rio. Isn’t that telling you that someone is being paid way too much for the company he is managing? Mind you, one is highly educated, highly experienced and the manager of a company that generates billions in revenue and the other one is… nothing (yet?). RM has delivered very little to show for sadly.
Before everyone starts criticizing me and that I am simply a very bitter investor that lost money, well that is also incorrect as I am just even at the moment. I think people need to realize that RM is not unreplaceable… His track record is so far average to poor at the most. JORC is good to have but Axiom messed up the mining lease application process, they didn’t play their cards smartly and are burning cash faster than ever seen. How can one justify being paid that much when absolutely nothing is happening?
Things and people need to chance or the company will go bankrupt.
This is my modest opinion of someone that has seen many projects develop and overcome those exact same issues.
Regards,
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