My experience with a junior exploration company

I would like to share with you one of my experience with junior exploration company.

I was invited by a friend of mine to go to a boat part in a rainy evening.  It was an older boat and around 12 people had attended.  The host gave us a warm welcome and their whole family was there and gave us a great evening.  There were wine and cheese, some salad and some finger food.  There was this older gentlemen, he is a self learned prospector and had built a mine before.  He was talking about all the stories of how he had prospected the areas and find new mining properties.   Now he had retired and his older son is the CEO who runs the company (listed on the TSXV), his daughter is the secretary and the younger son goes to the field and do prospecting work.  It was a fun night and we exchange business cards at the end.

The next Tuesday, the older gentlemen gave me a call.  He told me he have something for me and ask me to go to his office.  I agreed and went.  I went to an older but very nice building downtown Vancouver and sat down with them in the water view boardroom.  We chatted for a while and we exchange some ideas.  Then he had showed me what he had done and think it might be something I personally wanted to invest in.  It is a mining property that they had done some work in the past and went out of money and would like to find an investor to invest some money to finish the job.  The amount is about $50,000, they told me it is not a high potential property but a o.k. property.  This property then qualifies as a property of merit and can list the company on the TSX Venture exchange.  He gave me the info, went over it and do some due diligence with some of my geologist friend and decided not to proceed.  About a week later, I called back and told him that I am not going to proceed because the potential is slim.  The older gentlemen then told me I know nothing about mining and hung up.

Since then, I had dug up a lot of smaller mining juniors and find the following:

1)  Spend a lot on Investor relations
2)  Spend a lot on management (including family members)
3)  Stories that sounds compelling but it doesn't work in the financial market
4)  When they ask you for money and you say no, they will start to be impolite.

I had recently checked the company's balance sheet on sedar.com and now has less than $200,000 in the bank account.  Which falls into to John Kaiser's category of vanishing juniors.  I guess I just don't have a chance to meet with the other 700 or so companies that do the same.

For these juniors, they spent too much money on IR and ask for people's money and spent it on IR again and ask for more money instead of drilling more holes in the ground that creates real economic value for their company.  70% to 85% of the money has been spent on salaries, investor relations and other general and administrative expenses.  Back in the old days, information was hard to get and you don't have the information unless you are a shareholder of the company or you have to contact your broker.  Now with internet, all the information are so transparent, the mining exploration industry really have to evolve to be more efficient, seek new ways to find new economic deposits and be very honest with their shareholders in order for the whole industry to survive its current crisis.