Interesting piece on stock option payments for management, by Kyle McLean of Exploration Insights:  http://tommyhumphreys.com/blog/the-real-cost-of-incentive-options.  The conflicting issues of dilution and alignment of interests, combined with a capital intensive situation (like mining exploration and new technology plays) mean that management mistakes are paid for by shareholders in businesses where very few of the companies could ever receive a cash payment on sale of their real estate or intellectual properties that exceeded their market cap.  He argues for an incentive system based on and fostering accountability, a focus on capital gains, entrepreneurial spirit, and a caretaking mentality.  Not sure how this would be be into practice, though.

FAIR Canada, the Canadian Foundation for the Advancement of Investor Rights, posted a very interesting article yesterday (you can read it at: http://faircanada.ca/top-news/exchange-conflicts-of-interest-must-be-appropriately-managed/).

The writer suggests that there are signficant actual and potential conflicts of interest in the way we currently run our stock exchanges, with the needs of the investors, who depend on the exchanges for their regulatory function as well as their trading utility, often taking a distant third place to both listed companies and the profit motive.

From an IR perspective, these conflicts are pretty clear.  Not to mention exchanges buying an IR firm in order to support their listed companies and then promoting the IR to new listings....

PDAC -- the Prospectors and Developers Association of Canada -- had its annual conference this week at the Toronto Convention Centre.  More than 31,000 people turned up, which made the show crowded, but exciting.  Despite the fact that some people were saying the show has become unmanageable, we got a charge out of seeing that many energetic and enthusiastic mining and service companies in one place. 

We walked and walked and talked and talked.  We heard scads of great stories -- it amazes me how undervalued some of the smaller players are, priced far below asset value.

Key to getting those valuations up to a more reasonable level is, of course, attracting investors.  Federal Mining Minister Joe Oliver did his best to help, announcing that he foresaw $100 billion in new investment in mining over the next 10 years (http://www.mining-journal.com/finance/canada-could-see-c$100-bn-mining-investment-in-next-decade-minister). 

Given that 40% of global exploration spending, amounting to $4.2 bn in 2012, comes from Canadian companies, it's clear that mining is a big ticket item for Canada.  In fact, mining employs more people in Canada than any other industry, including the automotive.

So, is the show too big?  I think, not big enough! 

The federal election in the US is provoking strong thoughts about truth (rather than 'truthiness' as described by Stephen Colbert so usefully) and ethical behaviour.  The leading Republican candidates seem quite willing to dispense with truth in the fight to win power, but few commentators are calling them on it.  It makes me wonder if we have become so sensitized to the need to call a spade an earth-moving implement that we are hesitant to identify and name lying as such -- that we have become inured to bushwah.

So does this extend to the business as well as politics?  As an investor-relations consultant, I have a responsibility to ensure that my clients' stories are told clearly and honestly.  Otherwise it is impossible to manage investors' perceptions and expectations (it's hard enough when you're dealing with fact let alone adding fiction).  If you are in investor, is it your sense that more businesses are falling prey to a tendency to stretch, paint, mould, embroider, or alter fact to entice you to buy stock? 

Oh frabjous day!

Lewis Carroll had it right. With the market's vorpal blades going snicker-snack, it's way too easy to see tragedy coming even on the brightest day. I envision my portfolio evaporating and my client base dwindling, and I can get quite deep into the drama of it all. Intransigent Greeks (no gifts forthcoming, apparently), idiot politicians (into which category nearly all US incumbents and wannabes now seem to fall), the falling dollar, increasing protectionism, European devolution -- we're not getting a lot of good economic news.

So, cock-eyed and contrary optimist that I am, I start to tally blessings. Resource companies continue to get funding, and the commodity markets are still holding. Gold stocks, especially for smaller entities, are undervalued and represent a real buying opportunity -- particularly with the Chinese starting to make gold property acquisitions offshore.

Technology innovation is strong in Canada, and start-ups are getting an unprecedented amount of government help to commercialize their products (just ask me!).

Even biotech is showing some signs of hope. The US seems to be working on developing a better relationship with China, one of the outcomes being Chinese agreement to help protect IP.

Never mind the market volatility -- pundits wiser than I suggest much of this is mechanical, or at least mathematical, and there is money to be made in the swings as well as in steady growth.

And Angela Merkel has made stocky women hotter than they've been since Peter Paul Rubens was mixing egg tempura.

So for now, we seem to be holding our own against the forces of chaos.

Summer in the City

There's an old saw, "Sell in May and go away", that used to be regarded as received wisdom on Bay Street. This year, however, we're seeing so much activity that the saying seems more wishful thinking than advice.

The city is buzzing with events, from the Indy to Jays games (anybody still go to these?) to Summerlicious.

The Street is also humming. Everyone is watching the US with some trepidation, while the New York markets and the US economy act in diametrical opposition, each hitting highs and lows respectively. Greece is a concern. Copper prices are strong, then weak; gold is weak (if you can call $1500 weak), then strong. China is flavour of the month, then hits the skids with the Muddy Waters Sino Forest exposé.

So many issues to juggle.

And -- here's the thing -- nobody goes away anymore. All my clients say they're going on vacation, but they're really on their computers and iPads and cellphones, and pretty much accessible at all times.

Sell in May and then watch like a hawk for opportunities -- that's the reality.

IRonside IR Sponsors London Cross-Border Co-Investment Summit

IRonside Invester Relations Inc. has sponsored the London Cross-Border Co-Investment Summit, the first Canada/UK angel summit, to be held September 30, October 1 and 2. The purpose of the Summit is to help high-growth Canadian SMEs expand into the UK and EU; other sponsors include the Canadian High Commission, HSBC, and the CSNX. IRonside's president, Robin M. Sundstrom, will be attending this summit as an angel investor.

The London Summit will be followed by a summit in Toronto, Ontario on November 25th, 2009, bringing UK SMEs to Canada for angel investment and strategic business development. Summits in additional locations around the world will be announced in the future.

IRonsideIR is working with The National Angel Capital Organization, the industry association representing angel capital throughout Canada, and Newmarkets Partners Ltd., an early-stage investment specialist, to develop a powerful international sales and financing eco-system for growth-oriented companies.

Click here for registration information.