What are your capital needs and how are you filling them?
Right now we have a $40 million term loan and are starting to pay that off — $2.5 million this quarter. We also have a $30 million revolving credit line; at the moment, we’re not sure we need that much. Our mine is cash-flowing so well that we could pay the loan off in a couple of years. The question is, when we get another mine going, how will we finance it? We’ll probably do it with cash flow and bank debt. We could do a stock offering, but that dilutes the value of the existing shares. We are a liquid company; our debt to equity is manageable. We’re not going to mess that up.
Earlier you referred to internal-control audits as “onerous.” Your public float is way below the current $75 million threshold for having to get an external auditor’s attestation on internal controls. How will you feel if the SEC finally requires smaller companies to do that?
Our market cap is around $200 million, but our public float is around $10 million. It is dumb to have to spend a lot of money on that. We believe in internal controls, but we don’t believe having them audited is the answer; the costs outweigh the benefits. The numbers that the investment community cares about are in the financial statements. So you have an audit of those — I’m not saying we should do away with audits. But if the investors are so concerned about internal controls, let’s let them vote on it. If they say they want to spend the money, I’ll say fine, it’s their money. But don’t force it down our throats.
And what about an eventual switch to International Financial Reporting Standards?
I’m against it. I’m not aware of any analyst screaming for it, or any mutual fund saying “Man, I can’t make an investment decision; we have to go with IFRS.” Here too, make it optional, don’t force it. If you want to stick with the gold standard, the BMW, go with U.S. GAAP. If you want to downgrade to a Hyundai, go with IFRS. Then let the marketplace decide, not a bunch of bureaucrats.