Video: Doug Silver shares a benchmark for finding ‘lifestyle companies’

So-called ‘lifestyle companies’ continue to give the junior exploration industry a bad rap, Canadian Mining Hall of Fame inductee Doug Silver warns.

These outfits prioritize management’s welfare as marked by high discretionary general and administrative costs over asset value growth, often leaving shareholders with a portfolio that fails to generate lasting returns.

“The notion of a lifestyle company is a pejorative term, saying you’re basically raising money to support your lifestyle as opposed creating shareholder value,” Silver told The Northern Miner in January during a Vancouver industry event.

He supported his analysis with research. It showed that the basic costs of running a public shell are about $215,000 a year. This is very different from the inflated spending seen in some companies. This benchmark, he implied, exposes when firms misuse investor funds.

“If you go out and raise $300,000 or $400,000 and you have salaries, you’re not doing any work,” he suggested. “You might be a lifestyle company.”

Watch below the full interview with The Northern Miner’s western editor, Henry Lazenby.