SNS Silver and the Dewey Decimal System
I wish there was some kind of 43-101 Dewey Decimal System for press releases. When you walk into a library and look up a book, you have the Dewey Decimal System telling you how it is classified. If you look to the right, you have the non-fiction stacks and on the left we have the fiction rows. It makes picking out books a whole lot easier if you know which is fiction and which is non-fiction.
As writers churning out words about various companies, we are forced to believe what we are told. If someone looks you in the eye and tells you that he is going to do X, you pretty much have to believe him. It's only in hindsight that you know the fiction from the non-fiction. I'd guess that I am lied to about 50% of the time. I think it's wonderful. Barbara and I used to be in the computer business and we got lied to 100% of the time.
I wrote about Sterling Mining back in 2003. If you would like to read it, you can go here. And you probably haven't noticed but I am the only commentator on precious metals who has every single word I have ever written about various companies still posted on the web. Lots of guys will claim in hindsight to have said something they never said. No one else feels brave enough to munch on his or her words years later. My worst calls are still posted. There aren't that many.
Sterling was a bad call. It wasn't a bad project but it fell into the hands of a guy with a big ego and not a lick of mining experience. SNS Silver is trying to duplicate the failure of Ray Demotte. Their latest press release would be listed in the fiction section if the Dewey Decimal System applied to press releases.
I also did a piece on SNS Silver back in early 2007 after a visit to their project just across the street from the Sunshine Mine. I said to them at the time it made a lot more sense to combine their potential mine with the mill leased by Sterling. SNS Silver was another bad call. When I wrote about them, the stock was $1.83. It climbed to about $2.20 and has done nothing but drop since then. It's $.14 now after a remarkable 93% or so decline. They haven't done any of the things they promised. I suppose I have had 30 phone calls with David Greenway and every single call had a new promise of action and nothing ever happened. The company has gone through $18 million dollars in 30 months and only found about 10 million ounces. That's pretty bad. It's pretty easy to go through money like it's water when the Chairman of the Company drives a Maserati.
David Greenway wanting to take over the lease on the Sunshine Mine isn't anything new. He's wanted to do it for years. It isn't going to happen.
As I said a few days ago, John Ryan, David Greenway and Andrew Grundman were all directors of Sterling Mining. As directors their first legal obligation was to the shareholders of Sterling Mining.
But John Ryan and David Greenway were also Directors of SNS Silver. Andrew Grundman had been a director of SPMI, the underlying landowner of the Sunshine Mine and would soon become a Director of SNS.
While John Ryan was Chairman of US Silver, David Greenway was Chairman of SNS Silver. To add to the confusion, John Ryan would soon resign from SNS and Andrew Grundman would come on board SNS as a director.
So you can see it's pretty confusing. Just whom did these guys actually represent? Did they represent Sterling Mining shareholders or SNS shareholders or SPMI or US Silver shareholders? The whole deal is fraught with opportunities for conflicts of interest.
Basically, what Greenway and Ryan did in February, after the restraining order was in place was to try to cancel the lease held by Sterling on the Sunshine. Then they resigned from Sterling.
I had a couple of phone calls from David Greenway telling me all the great things he was going to do at the Sunshine. I pointed out that there was this giant conflict of interest in being a director of Sterling and giving away their only asset right after a restraining order was granted. He told me that since Sterling was essentially bankrupt, the lease had no value so the Sterling shareholders wouldn't miss it.
This is the same lease he immediately paid SPMI $250,000 for as a signing bonus, the lease with no value to Sterling shareholders.
As soon as their resignations were effective, they did a deal with SPMI where SNS would take over the lease. When Sterling as the Debtor in Possession objected to the reassignment, SNS came in and said there was no lease and the court should find SNS has the lease. John Ryan, recently Director of both of Sterling and SNS Silver attempted a remarkable triple dealing as he tried to convince the court that a group led by US Silver should be assigned the lease instead of SNS Silver.
When SPMI first did the lease with Sterling in 2003 silver was about $4.50 an ounce. The lease called for shares in Sterling yearly and a monthly payment of $10,000. Silver is a lot higher today. Do you think it's possible that Robert Mori would do anything in his power to cancel the lease with Sterling?
I think so too.
So SNS Silver does a deal with SPMI calling for an $80,000 a month lease payment and an immediate payment of $250,000 to SPMI so SNS can take over the lease. I'm not shocked at all when Bob Mori was quoted in the latest "clarifying" press release, "In the meantime, we will vigorously assert our property rights under all applicable laws to make sure the Sunshine mine remains in competent hands, and that means SNS Silver."
If these guys are all dealing fair and square with each other and are such bosom buddies, I'd like to know how soon SNS Silver gets its $250,000 non-refundable deposit back.
The judge's order was really simple. SNS has no lease on the Sunshine. As much as Robert Mori would like to do a new deal on the Sunshine, Sterling still owns the lease and has certain rights.
I am a betting man and I bet once on SNS Silver based on a lot of hot air promises. It was a bad bet. Just how valid those promises are can be traced in a three-year chart of the stock. If being in the hands of SNS Silver represents "competent" hands, I'd just love to know who Mr. Mori would consider "incompetent."