Southern Arc Workshop for Investors
March 14 2008
Southern Arc put on an evening workshop for shareholders on the opening day of PDAC in Toronto (March 2 2008). The event was attended by perhaps 55 people in total, including a large contingent from the Stockhouse.com BullBoard.
Stockhouse.com published three pieces covering this workshop. Links to their 3-parter are shown below:
James Giesbrecht, of Winnipeg, an SA shareholder, and active contributor to the SA BullBoard, shared his own experience related to attending this workshop, as follows:
As I was driving home yesterday I found myself once again pondering why SA has (IMHO) remained extremely undervalued by the market. We have discussed various thoughts on this issue in depth on this board, but I always find myself reevaluating situations to ensure that I am completely comfortable with the investment choices that I make.
I started by thinking about the various people I talked to last Sunday at PDAC. In particular I thought about the people representing companies other than SA. I met several people both at the convention and outside of the convention. Without hesitation I will say that I did not come across a single prospect that had the whole package, some had management that reminded me of (pardon the stereotype) used car salesmen. Others were hoping to get a drill someday, while still others were convinced they had a solid claim if only they had the money to visit it. Don’t get me wrong, I’m not suggesting that SA is the only junior in the world that has all the components needed for a great company, I am merely pointing out that they are definitely among the few juniors that truly have the goods.
So if SA is truly among the better juniors in the market (and I sincerely believe they are), then why does the market have them undervalued? The market is never wrong, however sometimes it takes the market a little time to be right. The market is made up of investors, so to understand the market it is important to first understand investors. I am going to go out on a limb and suggest that there are a lot of investors that are (for lack of a better term) not dumb. So if investors in general are intelligent why would there not be a higher recognition of SA’s value?
I then thought back to a conversation that I had Sunday night just before I caught a cab back to my hotel. I had just left the SA workshop and was standing on the street in front of the Royal York Hotel. There was a rather distinguished looking gentleman standing outside waiting for his ride. I was still in a rather talkative mood so I struck up a conversation with this fellow. Shortly into the conversation it became quite apparent that he was well versed in the PM sector. He elaborated on several mining ventures that he had been involved with over the years and offered a friendly smile as he tried to recall exactly how long he had been investing in the sector. After talking for some time he asked what had brought me to PDAC. With my SA booklet in hand I told him that while I was also here to look into other investment opportunities, my main purpose was to meet the management of a junior called Southern Arc. He seemed quite interested as I gave him a quick overview of the company. However, as soon as I mentioned that the company was exploring in Indonesia he shut right down. In a very polite but firm way he stated that he would ‘Never again invest in a miner in Indonesia.’. He went on to express his perception of government corruption in Indonesia as well as (of course) Bre-X. I could tell that he was one that would not read the SA story, not even get to the first paragraph, because he didn’t like the headline.
A couple of miles farther down the road home I began to think of the gentlemen that I had the honor of joining for dinner on Sunday. Around the table were vwig, xfactor, Kevin, Kumbakara, Jeff and Omar. My mind drifted to the enthusiasm that they all shared for SA. What distinguished these investors from the man that I spoke with in front of the Royal York? It didn’t take long to recognize the true difference between those that I had dinner with and the man on the street. Each person at the table had accomplished significant achievements in their lives. Whether it was achieving early retirement, running their own business or bringing an exploration company to life. I’m not speaking of social status but rather the characteristics that one requires in order to accomplish these goals. None of these things can be achieved without foresight, perseverance, a certain degree of risk tolerance and the ability to take the first step down the road less traveled. In short they were all leaders, none of them followers. These are people that keep an open mind and read past the headlines right to the last word in the story. Upon completion of reading the story they will digest what they have read and then read the story again.
I believe that the majority of those invested in SA share some if not all of the same traits as the gentlemen who enjoyed a fine meal at that steak house in Toronto. So does this mean that only leaders will invest in SA, you know the ones who take the time to read the story right to the end? Perhaps for now that is what we should expect. But keep in mind, a good story often becomes a best seller. They often make movies of best sellers. Will the gentleman that I met on the street in Toronto eventually invest in SA? I can’t say for certain, but I wonder what he will be thinking when he sees the movie and then remembers the night he couldn’t get past the headline. By the way, my thoughts will have been confirmed if you have just read this word…
My own take on the significance of this workshop to the junior market, generally, is as follows:
In these turbulent times, those low-float juniors don’t have much of a chance to avoid the ups and downs of the market. Period. Where those who survive may differ from the counterpart (all other things being equal) is hinged on success in steering and retaining shares into strong hands. Southern Arc has an extremely small active float of trading shares. The Stockhouse BullBoard is, in my impression, the retail market for this Company, or at least, a significant share of it. The general responsiveness of the Company to BullBoard members, both on a daily basis, and as reflected in their provision of the recent workshop, will be key in calming the fears and anxieties of ‘joe average’.
Not long ago, the stock suffered a meaningful setback in share price after a couple of disappointing drilling results. Truth is that only 1.3% of total shares traded in the two days that followed the news… and that probably includes some double counts. The environment of calm and patience that prevailed then, and does now, on the SA Board just has to be a good omen for the days yet to come.
The recent workshop saw little to no discussion about share price. It was about the fundamentals, as planned, even in the face of recent share price declines. This is the lesson for other juniors looking to improve relations with their retail investors, and who see value in including those investors in crafting the future of the company. For the most part, retail investors feel entirely at the mercy of the market, and the ‘big guys’ who make back room deals that don’t even acknowledge that we exist. Southern Arc is a beacon in the night for the Venture exchange. This Company is a ‘how to’ on investor relations. Are they perfect? Not. Are they exceptional? You bet! This lesson will be completely wasted on many in the field because they don’t, at heart, really care about the small retail investor. I’m not suggesting that John Proust is a Robin Hood type of person. He’s just a smart guy who recognizes that his retail investors possess an enormous potential to serve and protect the interests of his Company, and in turn, his own interests. In short, he can see past his nose. A good portion of integrity doesn’t hurt, either. More would do well to think on his example.
The Company, through no small efforts in recent months, has succeeded both in keeping this key market segment well informed and in assuring that folks will hang in with the Company, despite volatile shifts in share price. I’ll be interested to watch the continuing human dynamic on the SA BullBoard as we sustain this journey. While we’ve got a friendly and constructive Board already in place, I’m wondering how folks who were previously anonymous to each other will behave, now that they’ve had the chance to meet face-to-face.
Perhaps my circumstances are different from others, but frankly, my experience as an SA investor is a successful experience already (though my shares are valued in the market at far less than I paid for them), because I’ve added a good number of new friends to my portfolio. Money is nice, but it’s not everything. As I’ve said before, I like my (Russian born) wife’s expression, “It’s better to have a hundred friends than a hundred rubles.” The corollary, of course, is that it’s better if each of those hundred friends also has a hundred rubles.”
Cheers,
Kevin