A Christmas story of lost production and a Wall Street anomaly

When Revett Minerals’ Troy Mine shut down temporarily early this month, employees were concerned that they might have to go without paychecks during one of the most expensive seasons of the year. 

It’s Christmas, after all. And the 200 or so mine employees were counting on their paychecks to buy all the fixings for a holiday feast, gifts for their loved ones and stocking stuffers for their children. Very few have the luxury of a deep savings account to rely upon when disaster strikes. 

But just when things started looking bleak, the company’s CEO did something remarkable by anyone’s standards. By Wall Street’s standards, it was almost a total anomaly. 

John Shanahan, the Aussie-tongued head honcho at Revett, had three options when seismic activity caused a little too much moving and shaking underground: Keep the workers in the mine and continue producing; tell the workers to go home without pay until it was safer to operate underground; or halt all underground activity until it was completely safe and give workers the option to stay on the payroll if they could find something to do above ground. 

Shanahan could have appeased Revett’s investors by choosing either of the first two options. Instead, he surprised everyone by closing the underground portion of the mining operation until further notice and allowing his employees to draw a paycheck during the holidays. 

Word on the street is that some investors were unhappy with Shanahan’s decision. They showed their dissatisfaction by dumping shares of Revett, sending the company’s stock into a tailspin that included a 10-percent loss of value in a 24-hour period. 

We’re not talking chump change. According to Revett’s most recent financial report, the mine generates revenue of about $6.5 million per month. So that’s how much it will cost the company to shut down production for 30 days. 

Also, Revett was valued at about $105 million just before the mine shut down, according to financial analysts who tallied the figure by multiplying the company’s share value by the number of shares held by investors. It’s now worth about $97.5 million, reflecting the company’s sharpest quarterly decline in years. 

Shanahan is rumored to be a shark on Wall Street. And nobody gets that kind of  reputation without stepping on a few heads along the way. So, his decision to support his workers probably sent a few amps of electrical current directly into the spines of investors who have trusted him with their money for years. 

For some reason, Shanahan did the unthinkable. It was generous. It was shocking. And it was the right thing to do. 

There is some speculation that regulators may have urged the company to stay closed until the threat of additional underground movement subsides. But that doesn’t explain why Shanahan prioritized his employees’ financial needs above his own. 

That kind of stewardship is a huge red flag on Wall Street. It’s a signal that the company’s leadership is soft and squishy.  It’s a sign to put your money somewhere else. 

The message I get, however, is: Buy now. Revett stock is selling artificially low because investors realized their normally shrewd CEO has a bigger heart than they imagined. It also tells me that people can sleep well at night investing in a company where employees are more than just company assets. 

And, to top it off, the Revett employees raised thousands of dollars this year for food banks in Libby, Troy and Noxon. I heard the combined donation this year was close to $18,000, about $3,000 more than last year’s total. 

Christmas is a great time to tell stories about selfless acts of kindness. But because Revett’s leaders were too humble to publicize their goodwill, I decided to do it for them. 

So, merry Christmas to all Revett employees. And, to Shanahan: Have a bullish New Year. 

Matt Bunk is publiser of The Western News.