Flags of Convenience? Ouch!

The following is the English translation of an article in Spanish that was published by Agencia EFE, S.A, founded in 1939. EFE is a Spanish international news agency, the major multimedia news agency in the Spanish language, and the world’s fourth-largest wire service after the Associated Press, Reuters, and Agence France-Presse.

The draft was originally aimed at one “zombie” operating in Spain but morphed into a critical look at mineral exploration companies listed on the TSXV.

In the past two months, the Spanish version has been published by at least these sites: clarin.com; diariolibre.com; efe.com; elbuencomerjerez.es; eldiario.es; embajadadepanama.com.co; es.finance.yahoo.com; es.sports.yahoo.com; es-us.finanzas.yahoo.com; es.vida-estilo.yahoo.com; granjaeltioisidro.es; holanews.com; infobae.com; laconexionusa.com; lajornada.ca; luznoticias.mx; magazinelatino.com; miningwatch.ca; mobilnews.mx; msn.com/dinero/noticias; noticias.alianzanews.com; noticiasextra.com; paopin.cl; petrol.news.net; portalpolitico.tv; pulsoslp.com.mx; quiosco.com.do; raleigh.quepapanoticias.com; remamx.org; restaurantathletic.es; santotomasdeaquino.es; solealpantheoncollection.it; theworldnews.net; vision2020noticias.com; ye-music.fr;
34 and counting…

Toronto (Canada), Oct 13, 2020 (EFE)
Canada has become a “flag of convenience” for mining exploration companies around the world, the equivalent of Panama or Liberia in the world of shipping companies, to the point that hundreds, many operating in Latin America and Spain, are “zombie” companies with no real activities, according to experts consulted by EFE.
The latest data from the TSX Venture Exchange (TSXV), the main Canadian venture capital exchange for emerging companies, indicates that almost a thousand mining exploration companies are listed in this market, whose headquarters are in the Canadian city of Calgary and which carries out all its operations in electronic format.
Mining exploration companies on the TSXV have a market capitalization of C $35.87 billion (US$ 27.08 billion), according to figures released in August 2020 by the TSXV.
But according to experts consulted by EFE, hundreds of these mining exploration companies are companies that do not meet TSXV’s own requirements to be listed on the market and that in many cases only serve for their executives to maintain a “high lifestyle.”
Tony Simon, co-founder of the Venture Capital Markets Association and president of Seguro Projects, a company that options mining properties and mineral rights, told EFE that the problem is rampant in the Canadian mining sector.
Simon is the one who popularized the use of the term “zombie” company in the sector in 2015 when he found that hundreds of mineral exploration companies listed on the TSXV did not comply with the rules of the exchange regarding the requirements for working capital.
“When I did my first study of the exploration companies registered on the TSXV but with negative working capital, there were more than 600 companies that did not qualify according to the TSXV’s own Corporate Manual. Specifically, Policy 2.5”, he explained.
And since then, the number has continued to rise.
“I called companies with negative working capital zombies because they are dead but they are still running,” he told EFE.
Mickey Fulp, known in the industry as “the mercenary geologist” (www.mercenarygeologist.com), agrees with Simon on the problem posed by “zombie” companies in the Canadian mining exploration industry.
“A ‘zombie’ company is a lifestyle company that pays its executives and directors but has significant negative working capital and has not carried out much or any exploration for years,” Fulp told EFE.
“At the same time, they raise funds when they can to pay salaries, general and administrative expenses, accounting, registration costs, lawyers, auditors, office rentals, etc. It’s what I call ‘mining the stock market,'” Fulp added. Fulp is a geologist with more than 40 years of experience as an economic geologist who has worked in America, Europe, and Asia.
“And there are many of these companies on the TSXV,” he concluded.
As Simon and Fulp explained, one of the TSXV standards that these companies violate is the requirement of “adequate working capital or financial resources greater than $50,000 and an amount required to maintain operations and cover general and administrative expenses for a period of 6 months.”
The permissiveness of the TSXV towards mining exploration companies that do not comply with the regulations is proof of the scant interest of the Canadian authorities to rein in a sector that operates mostly outside of Canada and that has been denounced on numerous occasions by human rights organizations and environment.
Jamie Kneen, the spokesperson for Miningwatch, an NGO that acts as a watchdog of operations in the Canadian mining exploration sector, explained to EFE that the problem of “zombie” companies in the sector is a consequence of the fact that Canada is “a flag of convenience” in the sector.
“It’s like Liberia or Panama for shipping companies. Canada provides the flag of convenience but we do not require them to follow precautionary measures. That is why mining companies from other countries come to register in Canada,” Kneen said.
The experts consulted by EFE pointed out the little interest of the Ontario Securities Commission (OSC), where the TMX, the company that owns the TSX Venture Exchange (TSXV) is located, in acting against these “zombie” companies.

EATS. Dot.com Daze?

History repeats itself. We have encountered the reincarnation of dot com daze (with its mantra “business is different now”). It took a while but we all know how that philosophy worked.

First, let me congratulate the principals at Eat Beyond (EATS) because they have come up with an excellent plan and they are not conning anybody. They get to regurgitate the news releases of all the companies they have invested in. The problem is reality and the speculators who have no idea what they are doing.

EATS is an ETF (Exchange Traded Fund), pure and simple. There is nothing wrong with ETFs and many people use them because it allows them to simplify their speculating or investing and not to have to concern themselves with research on a large number of stocks. The ETF does that for them.

But everyone needs to remember – it’s just a fund. It doesn’t invent anything or make anything. Its potential upside and potential downside are limited to the value of the diverse investments that it has made.

All ETFs are supposed to be, and in most cases are, valued the same way using NPV (net present value) and dividing it by the number of units or shares.

Looking at the latest financial statements on Sedar.com, EATS has approximate current assets (cash and shares for sale) of $2.965M, current liabilities of $137K, and 19 million shares/units outstanding, Therefore the NPV is currently in the range of $2.828M or 15 cents per share.

That’s reality. So how is it possible that people are piling into the stock and raising the market cap to somewhere over 45 million dollars or $2.40 per unit? (actually traded over $3.00 today before somebody started getting smart).

Not only is there a huge disconnect between the NPV and the price of the stock, but there is also another big problem with this little ETF.

Most ETFs are administered by computer or, if not, by efficient humans so that the administration cost is only 1% or 2%. This ETF is being run like most Canadian listed junior companies with approximately 17% of the ETF paid out for overheads on a yearly basis.

It is not a sustainable situation.

So, are EATS shares destined to find their true level (15 cents)? Yes.

Can the principals do anything to up that “true level”. Yes.

The stock has traded over 13M shares over $1.50 in the last three days. If they could quickly close a private placement before the bloom comes off the rose (say 12M shares @ $1.50), the basic numbers would change substantially. The true level would be 67 cents, and overheads would be down to 2.5% on a yearly basis.

Let’s see what happens.

Enough Already!

To all the “experts” who incessantly rant about buying gold or bitcoin or whatever: STFU.

In case you have been so preoccupied with your “expertise” that you don’t recognize the acronym, it means Shut The Fuck Up.

All the bullshit headlines you use to try to attract attention are pathetic. Grow up, and invest for yourself – quietly. And quit trying to get other people to buy your advice.

“Here’s Joe Blow, who has called every trip and dip in the markets since the turn of the century. The average gain on everything he has recommended is 1497.5%.” Really?! Now this bullshit billionaire will sell you his advice for the not-so-paltry sum of $499 (USD, of course). What does he need the money for? To pay rent? margin calls? or what?

At the very most, all we might like to see is your complete unexpurgated portfolio published once a month. That information will allow each of us, as individuals, to judge whether you are blowhard morons or not.

In interesting times, like we are in today, your bullshit is spreading faster than covid-19. Stop!

Contender for Stupid Statement of the Week

From the Canadian Foundation for Advancement of Investor Rights:
“Investor interests, including retail investor interests, should be a critical consideration in the creation of a modernized capital markets regulatory framework. Investors are one of the main beneficiaries and stakeholders.”

How much did someone get paid to write that pious drivel?

Almost Time For The 2020 Exploration Company Zombie List!

What is a Zombie?
A TSXV- or TSX-listed company that has negative working capital [current liabilities exceed current assets].  Our current study is limited to mining and mineral exploration companies.

What are Continued Listing Requirements (CLR)?
If you go to the Corporate Policy Manual and look at Policy 2.5 there is a table that shows minimum working capital needed ($50,000 or 6 months of operations and G&A) and minimum mineral exploration activity required ($50k exploration in the latest year and $100k in the last two years).

What is supposed to happen if a company fails to meet CLR?
If it meets all but one requirement, the exchange is supposed to issue a notice giving it six months to repair the deficiency or it will be transferred to NEX or delisted.
If it is deficient in two or more requirements, notice is reduced to 90 days.

The requirements and remedies seem clear. Why put out a Zombie List?
When the exchange either doesn’t enforce its CLR rules or enforces them selectively, and when auditors fail to note that a company’s most material contract [the listing agreement] is at risk, investors who assume that a TSX or TSXV listing means the company is viable are basing their conclusions on incorrect facts.

How widespread is the problem?
Our latest stats for mineral exploration companies were assembled in December 2019. They show 398 TSXV Zombies with total negative working capital of over $1.7 billion. In addition, there are 47 TSX Zombies with total negative working capital of over $1.4 billion.
Add it up: 445 companies over $3.1 billion in the hole. And that’s not including CSE exploration listings with negative working capital. We’ll save those figures for another day.

Valuable! from an interview with Doug Casey

Technology has been advancing at the rate of Moore’s Law for the past 200,000 years. That curve finally passed the knee joint and has been going towards vertical for the last 200 years. But heretofore a major thrust of technology has been to make things smaller. You’ve seen the computer fall from room size to iPhone size. That’s true with all electronics. You’ve seen engines go from big, inefficient steam engines to small, highly efficient jet turbines. Miniaturization has been great. It almost always makes things lighter, more efficient, and cheaper.

Nanotechnology, however, takes a totally different approach. Nanotechnology is all about engineering things from a molecular level and making them larger. In essence, it’s the construction of machines, atom by atom, using molecular-sized assemblers, guided by molecular-sized supercomputers. I did a chapter on this in Crisis Investing for the Rest of the ’90s. At the time, not one person in 100 had ever heard of nanotech, or had a clue what it was. In its ultimate form, nanotech – the use of molecular-sized assemblers and supercomputers – will change the character of reality itself. Totally and unrecognizably.

It amounts to pixie dust, making it possible to manipulate the 92 naturally occurring elements into basically anything, cheaply and easily. Imagine an infinitely powerful 3-D printer. But that’s too conservative an image. Better, imagine a pile of dirt that – based on what the assemblers are instructed to do by the supercomputers – self-assembles into anything you can imagine. That’s the ultimate evolution. It’s hard to predict when that will happen. But I suspect that science fiction is way too conservative. Especially in regard to its time horizons.
Looking just at the present and very near future, however, it’s becoming possible to fabricate totally new materials, like carbon nanotubes, that are vastly more capable than any “natural” material.

Progress is being made, albeit slower than I expected. We can – in fact this was first done 30 years ago – manipulate individual atoms and move them around to spell words. Admittedly, that’s something of a sophisticated parlor trick with limited practical applications. But it gives you an idea of what has already been done.

But here’s the point that I’m making. When we arrive at the point where submicroscopic assemblers – guided by submicroscopic supercomputers – can disassemble compounds and reform them into different compounds and then reassemble those into large objects, literally anything becomes possible. We will have created, in effect, pixie dust you’ll be able to throw on the ground. Then, if it’s programmed to, it will pick out atoms of any of the 92 naturally occurring elements, and assemble them into anything that you’d like. It’s literally magic.

That’s the ultimate evolution of nanotechnology. That’s the direction that it’s ultimately headed towards.
For 30 years I ran something called the Eris Society, here in Aspen, Colorado, where I’m talking to you from right now. At those conferences, which were strictly invitation only, we had people that were leading lights in many fields. Everybody from Paul MacCready, the inventor of the Gossamer Condor, and Burt Rutan, the designer of SpaceShipOne, and Phil Zimmermann, who invented Pretty Good Privacy (PGP), all the way to Sonny Barger, President of the Hells Angels, and Stewart Brand, who founded the Whole Earth Catalog. It was a fairly eclectic group. Lots of famous authors and people who’d done something outstanding, or weird.

We’d hang out for three days, most attendees giving a speech on what they knew about or were doing, and get to know each other. Eric Drexler is, in fact, the godfather of nanotechnology and wrote the seminal book Engines of Creation. He was standing on the shoulders of Richard Feynman, who first explored the concept in a speech he delivered in 1959 called “There’s Plenty of Room at the Bottom.” As you’d expect, Drexler is a very bright guy. I got to know Eric at Eris, though I haven’t kept up with him since then. But, it was clear to me that this is the way technology would eventually be the ultimate evolution of the material world.
The first big applications will be in material science and biotech. The centerpiece, the star of the show, is the carbon atom. Let me retail a few basic facts. The carbon atom has some unique advantages. It’s a simple atom, with an atomic number of only six, and a light atom, with an atomic weight just over 12. Because of the way it’s structured, it can form extremely large chains with itself, and complex ones with other elements. As I’m sure you know, carbon is central to all life as we know it. Every living thing is built around the carbon atom, and we know of at least 10 million different carbon compounds. That last fact is why carbon and nanotech will be huge in the biotech arena.

One relatively trivial biotech application would be the creation of tiny machines which, released into your bloodstream, would cleanse your arteries of plaque. Or attack cancer cells very precisely and selectively – no more necessity to use surgery, radiation, or chemotherapy. We’ll look back at cutting, burning and poisoning cancers as primitive, the way we now see 19th century medicine.

But perhaps the first mass nanotech application will be with graphene. That material is pure carbon, like graphite or diamond, but in the form of a film only an atom thick. It’s extremely light, but much stronger than steel. How about a bulletproof vest that weighs nothing and is practically invisible?

It will revolutionize construction and architecture because it’s so ultralight. And flight. And spacecraft. It’s going to be huge when it finally comes into its own. It could be one of the biggest things since the start of the Industrial Revolution. The problem, of course, is cost. And making mass production economic. But costs are dropping exponentially. Just give it time.
People’s psychologies are always the ultimate problem, not technology. The aberrations that seem hard-wired in the human mind. It’s almost a replay from H.G. Wells’ book The Time Machine, which was written more than 100 years ago, where the human race has speciated into Morlocks and Eloi. I wonder if a variety of that scenario isn’t happening even now… but that’s a different subject.

Most individuals are tolerably rational in their own lives. But the more of them you put together in a group, it seems the lower the common denominator has to be. The larger the group, the more it acts like a mob, and the more dangerous it is. This is the problem with the global consciousness being fostered by the mass media, social media and the Internet. Humans seem to be mutating into a hive mind. Or various hive minds.

Meanwhile, the technology is advancing, as I said, at the rate of Moore’s Law, and the curve is now going vertical. That’s the good news. Technology is making it possible for humans to do almost anything imaginable.

The bad news is that we’re still basically naked apes. Highly evolved chimpanzees, melding into a hive mind. Unfortunately, our psychological makeup hasn’t changed since the days of monkeys beating each other on the head with sticks. There hasn’t been serious evolution in moral thinking, or philosophical thinking, for many years. In fact, you can argue – just based upon the 20-odd people who want to be the Democratic candidate for President – that the level of philosophical, economic, moral, and political thinking is actually degrading.

This is a gigantic problem. It’s one thing when monkeys can attack each other with sticks. It’s something else when they can attack each other with not just atomic weapons, but things that are much more advanced. Which is going to be the case with nanotechnology.

Naturally, one of the objections to advancing nanotechnology is: What will happen if “bad guys” get control of it, and unleash it? Well, of course that’s a problem. But it’s just a subset of the bigger problem we’ve just discussed. Namely, “What could possibly go wrong if you give nanotech to smart, but ethically primitive chimps?” But here’s an even better question: “What if the assemblers themselves get out of control, on their own?” What if it turns into something like the Sorcerer’s Apprentice from the Disney cartoon that everybody’s seen? If the assemblers and computers keep replicating each other at a geometric rate, isn’t that going to turn the whole world into a massive grey goo?

Well, that’s theoretically possible. Probably not practically possible. But who’s to say? Remember, nanotech in its ultimate form is going to be not only the biggest thing that’s ever happened, but perhaps the biggest thing you can imagine. Among other things, it can probably solve the problem of life itself – at least if you assume life is a purely physical phenomenon. That being the case, I’d say any risk is worth taking.

I think about the possibilities because I’m essentially a solipsist. There are many varieties of solipsism. But essentially solipsism holds that anything that you can imagine is possible, and all of reality is basically a creation of your mind. So, yeah, things could get really wild and crazy in the future with technology in general, and nanotechnology in particular.

Although its evolution’s been slower than I expected so far, it too is advancing at the rate of Moore’s Law. It’s going to be magic. Just hopefully not black magic.

Will Canada Be Left Behind?

SEC looks to add more “Accredited Investors” to boost funding of smaller companies

The SEC is moving ahead with changes to the “Accredited Investor” definition which would allow a significant number of new individuals and institutions to invest in private securities offerings.

The new proposal would permit those with the financial knowledge and sophistication to be considered Accredited Investors, regardless of annual income or net worth.

These changes are considered an important component to help drive more investment in smaller early-stage enterprises which the Commission hopes will encourage them to go public earlier in their growth cycle. https://lnkd.in/gJ9skmJ