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.
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…http://www.firstmajestic.com/en/news/first-majestic-announces-acquisition-of-shares-of-first-mining-corpNon-cash transaction.Todd Anthony, MBAVP Investor RelationsTel: 604-688-3033Toll Free: 1-866-529-2807
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.