Letter to the editor: Rick Rule’s ‘ridiculous construct’

I find Mr. Rule’s comments about junior resource companies to be incredibly frustrating and unhelpful (“Interview: Market insights from Sprott’s Rick Rule,” T.N.M., Aug. 31–Sept. 6/15). It’s easy to call for the wiping out of hundred of “superfluous” companies, but obviously neither he nor anyone else can say which of the hundreds should be euthanized. It’s a ridiculous construct.

Take Esso Uranium. A 1¢ stock that the CEO loaned $500,000 to keep alive. Stupid, right? Wrong. It went to $6 after insanely high-grade discoveries at Patterson Lake in Saskatchewan. Alpha Uranium is a case in point that no company, however “superfluous,” should be written off.

And what’s with the $1- to 2-million-per-year estimate for keeping a pubco alive? Way off! Wrong by a factor of 10. More like $100,000 to 150,000.

Regarding the “800 schmucks and schmoes,” I personally try not to be so judgmental, as in my experience, often the people I think are the least likely to make discoveries suddenly emerge as heroes, having — often by sheer dint of perseverance — have made something amazing happen. The average prospector does not typically present as a Ross Beaty-style CEO.

Speaking of Mr. Beaty, I find his 100 million extremely cheap shares of Alterra Power akin to classic Howe Street. There is no law against loading up huge on cheap stock and selling on the way up (check SEDI — Ross is selling now). How do you think Ross got all his dough? He sold his stock. Is he a schmuck for doing it? Not in my books.

The fact is, despite the doom-saying and misguided punditry, fewer companies have disappeared from the TSX Venture Exchange recently than before.

Keep the faith, all you superfluous people. Hang in there.

Tom Sheering

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