Why I’m Withdrawing My Recommendation of First Mining Finance

One of the most important things I’ve learned in my three decades as an investor is that you have to have the ability to change your mind when the facts change.

Recently, I recommended a private placement investment in First Mining Finance (FF.V), based not only in my belief that gold is going to rise sharply in price in the next few years, but also based on the favorable terms of the deal and the excellent reputation and track record of Keith Neumeyer, founder and chairman of First Mining, and Patrick Donnelly, president.

Then we got the rug pulled out from under us.

Over the weekend, Neumeyer and Donnelly decided to change the terms of the offering and raise the price paid by investors from the agreed-upon CAD 67 cents per share and 95 cent warrant price to 80 cents per share and $1.10 warrant price. Why? Because FF.V’s stock price had increased.

This came as a surprise and a disappointment to me and to Money Map Press, which brought this deal to my attention (and is the publisher for Sure Money).

When I make a recommendation of any kind to you, I have your best interests in mind and nothing else. If a company acts this way today, what is to stop it from doing something in the future that hurts investors? I will not recommend doing business with them or have my name associated with them.

Accordingly I am withdrawing my recommendation of First Mining Finance at this new offering price. I respect Money Map Press’ decision to do the same.

Sincerely,


Michael Lewitt

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14 Responses to “Why I’m Withdrawing My Recommendation of First Mining Finance”

  1. Too bad about the change in the deal. But I for one, as I’m sure many others did, just bought the stock directly through our brokerage accounts. I own AG (on your tip – done VERY well, THANKS) and follow Neumeyer and what he’s up to. When I found out about FFMGF, I bought 30k shares @ .42 and another 30K @ .49 – I think many others have do the same. On days when every PM Miner I own and on watch lists have tanked, First Mining has gained (today is one example). So you no longer like the company, Neumeyer, and their future ?

    The inside deal looked attractive, but I’d have to pony up the 4k to join first. No thanks.

    Still love your work and recommends Michael and I respect your decision and Money Map Press if they express dissatisfaction also.

  2. Actually it’s a massive plus for FF. They have acted to minimise dilution of existing shareholders. Would you rather have management in place that look out for your interests as a shareholder, because they are also shareholders, or would you prefer management that is willing to debauch their shares at low prices ? Hat tip to Keith Neumeyer, very well done. (Of course, if the contract terms do not allow for this sudden change in the price then subscribers should sue them for breach of contract. Otherwise, best not cry over spilt milk.)

  3. CharlesEChees

    As a current shareholder on at .27 USD, I appreciate the move. Management has done well with the acquisition process and I see this move as continuing to protect my investment. I have heard that MMP has cost a lot of people money, but I don’t know of them personally, although they inundate me with emails. Please tell me again how this would cause me to think management would do something to hurt shareholders?

  4. So Michael, just wondering, if you think Neumeyer is now not trustworthy, will you withdraw your recommendation of First Majestic Silver as well ? He may misuse it’s investors also, no ? That would be the conclusion based on the thought logic of the FF dealings.

  5. Neumeyer is one of the smartest guys in the industry and has built some amazing companies. Rather than shooting yourself in the foot by having an emotional reaction “rug pulled out from under us,” why not get onboard with what appears a sound business decision. If you were negotiating to sell your house for $500k and the realtor called up and said that since the market was on fire for houses like yours and he had an all-cash offer for $600K, would you refuse if it was legal and within accepted practice? I think not.

  6. As a former CFO of a NYSE company, I think your insult to FFMGF acting in behalf of the shareholders is uncalled for. It’s not unusual to reprice a private placement offering – please withdraw your derogatory comment – I do follow you, will continue to do so and have respect for what you are doing in the public domain. This comment is out of character with your prior writings. Thank you

  7. “Keep your hands and arms inside the car at all times. Please remain seated until the ride comes to a full and complete stop”…

    Whew…what a ride so far. The deal may be sour but not the fruit !

    FFMGF:
    1. Up 20.2% in 2 trading days
    2. Up 205.5% YTD
    3. A potential 3000% gain per Mr. Ward (too many heavy handed emails from him for my taste. Even unsubscribed but continued to get them)
    4. So… what’s not to love going forward ?

    I may double my stake on the next dip…

    Just don’t get the un-recommendation. Only the exclusive offer was the attraction ? Not the man, the reputation, the company’s prospects ?

  8. You figure: last number I have . . . 561.7 fully diluted shares at $1 = say, $600M market cap . . . and net profits on somewhere between purch cost (<$50/oz) and resale value (say, $100+/oz (not even $150/oz)) from 28 projects . . . of which one project = (4.6 + .7 mil oz identified = 5.3 mil oz.) . . . + ( a mere 3.7– 6.3 mil oz from the other 27 projects to get say 9.0–12.0 mil oz ) to justify current value . . . implies an absurdly cheap current mkt price valuation . . . if . . . (a) 27 projects yields more ozs. or (b) the price of gold goes up or (c) the spread assumption above is low or (d) ???. . . then what’s FFMGF’s value in $billions???? So where are my numbers wrong? Figure: Say, $6 or $60 billion ???

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