Why Selwyn is two-faced

On March 3, 2014 Selwyn issued a press release stating that it is “currently exploring options for financing the Company, with a view to restarting the ScoZinc operation in Nova Scotia, Canada”.  (You’ll have to find this press release on SEDAR because it’s not the company website.)  A few months before that in December, Selwyn returned millions of dollars of cash to shareholders that could have been used to finance such a mine.  On the surface, it looks like Selwyn management is inept.  IKN has colorful commentary as always, even though I disagree.

If you have followed the Selwyn story, you would have known that activist shareholders pushed for the company to return capital to shareholders instead of pursuing an uneconomic mine.  I think what’s happening is that management has been trying to sell the project but failing to do so.  Because Selwyn will burn money on corporate overhead, they might as well do something rather than nothing.  They might as well issue promotional press releases to boost the share price to raise capital.  Honestly, what else can they do?  (I suppose the alternative is to issue press releases that would support efforts to try to sell the mine.)  The fact that Selwyn management is issuing silly press releases suggests that they are having problems trying to sell the ScoZinc project.  If I had a position, I would be selling it.

*Disclosure:  No position.

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