Tiger Resources Limited CEO jumps ship

Tiger Resources Ltd (ASX: TGS) CEO retires from board, but long-suffering shareholders are stuck with shares down 70%

Mike King

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Published August 17, 2015 11:13 am AEST

Copper miner Tiger Resources Limited (ASX: TGS) CEO Brad Marwood has retired after five and a half years at the helm.

Tiger's Board of directors have praised Mr Marwood saying, "[Mr Marwood] made a major contribution to Tiger over his five and a half years as CEO, having played a pivotal role in bringing the company's flagship Kipoi Copper project in the Democratic Republic of Congo (DRC) from a grassroots exploration project into full copper cathode production in less than eight years and delivering, first, the Stage 1 HMS operation and, subsequently, the world-class Stage 2 solvent-extraction electro-winning (SXEW) plant at Kipoi into production on time and on budget; an outstanding achievement given the challenges of bringing resource projects in developing countries such as the DRC on stream."

Michael Griffiths, a current director of Tiger will replace Mr Marwood as interim CEO until a successor can be found.

But as Tiger's board of directors are offering high praise for Mr Marwood, shareholders aren't likely to feel the same way.

Over the past five years, Tiger's share price has dropped by 70%, and currently trades at around 6.8 cents. Shares have more than doubled from just over 400 million shares in 2010 to 1.14 billion shares currently.

Since 2010, Tiger has generated more than US$500 million in revenues, and yet its total profit over that period is actually a loss of US$5.3 million. Last financial year, Tiger had revenues of US$143.4 million, but only managed to produce a tiny profit of US$3.2 million and just US$5.5 million in operating cash flow.

In 2010, Tiger had just US$5.6 million in debt – the miner currently has a whopping US$177 million of debt. Tiger has also raised US$273.5 million in equity. In simple terms, Tiger has raised US$450 million in capital (debt & equity) and produced a loss of US$5.3 million in the past 5 years – and $68.2 million in losses prior to 2010 – not exactly a great record and indicative of the issues of investing in resources companies.

While Tiger might point to the capital invested so far and point to production and revenues to come in the years ahead, at some point the copper resources at the flagship Kipoi mine will be depleted. The company will have to restart the process all over again (establishing a new mine, raising capital etc.) and shareholders are unlikely to be winners over the long term.

Foolish takeaway

Mining companies can rave about the performance of their executives and management, but at the end of the day, if shareholders see little or no return from their investment, they would've been better off keeping their money in the bank. Resources companies need to start focusing on returns for their shareholders as a primary goal. Maybe it's time for Tiger shareholders to jump ship too.

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