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3/29/16

UPDATED: First Mining Finance (FF.v): Keith Neumeyer props up its share price by quietly using First Majestic (FR.to) (AG) cash

RE the UPDATE: Please read the update below. And as noted on previous occasions, I much prefer to be called out wrong on a subject and leave the evidence on the blog for all to see rather than delete the post, so it all remains as-is.

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Here's an interesting part of the First Majestic Silver (FR.to) (AG) year-end financials:


Suddenly, and for the first time ever, FR.to has declared an equity position in First Mining Finance (FF.v) to the tune of U$3.5m (which is probably something close to 11m shares of FF.v). This is a brand new line-item, it didn't exist in the 3q15 financials or any other before it and that basically means Keith Neumeyer, head honcho of FR.to, has been using the big corporations cash treasury to keep his other smaller company's shares from collapsing under heavy selling pressure.

Also notable is how there are no registered filings on these purchases, how FF.v didn't run any equity financings in the period (i.e. these were open market purchases) and how FR.to (i.e. Neumeyer) stopped the buying before FR.to got its position to 10% of FF.v shares out, which would have triggered all the normal declarations processes.

Maybe he wanted to keep this quiet...hey I wonder why?

UPDATE: FR.to rebuts this post:

Otto - you are incorrect.  First Majestic received equity in FF as a result of property transfer in April 2015.  See link…
Non-cash transaction.
Todd Anthony, MBA
VP Investor Relations
Tel: 604-688-3033
Toll Free: 1-866-529-2807

IKN back. I never mind being proven wrong. However I do have a "why wasn't this declared on the financials previously?" question in with Mister Todd.


UPDATE 2: We get to the bottom of this and the result is I was wrong, but.....

Here's the exchange:

Otto: "so why wasn't it declared previously?"

Todd: "It was....From our Q2'15 financial statements" (at which point Todd shows Otto a screenshot of the 2q15 note 16, "other investments", where it was declared in this way:
Due to certain common directors and a common officer, the Company’s investment in First Mining is accounted for as an investment in associate. During the three and six months ended June 30, 2015, the Company’s share of First Mining’s net loss was $0.3 million (2014 ‐ $nil) and $0.4 million (2014 ‐ $nil), respectively.
As at June 30, 2015, the Company’s investment in First Mining has a carrying value of $3.0 million and a market value of $7.1 million based on Level 1 fair value measurement.

Otto: "But it wasn't classed as a financial asset (note 13, or note 14 in the YE). Why the change?" (because after all, it still has common directors and a common officer).

And then the e-mails went cold. So I asked the same question again and the answer came back.

Todd: "In short, due to the dilution of the Company through acquisitions, the ownership fell below of “significant influence” of FR over FF, and as a result it was downgraded from “Investment in Associates” and moved in Q4 into the category of “Other Financial Assets” where it must henceforth be marked to market every quarter."

And that's fair enough. Case closed.