WA resource executives urged to start believing the hype
Summary: WA’s resources sector is experiencing a vacuum of entrepreneurial spirit despite a wealth of opportunities waiting to be grasped, according to a prominent Perth deal maker.....
PCF Capital managing director Liam Twigger said commodity markets had ticked higher recently and there was a “wall of money” waiting to be invested but WA needed to swap the cautious mentality it developed in the downturn with self-belief.
“There are opportunities in the space with relatively cheap gold, copper and nickel assets in WA waiting to be picked up,” he said.
“Commodity markets have turned and investor sentiment has improved but there’s still this nervousness and hesitancy with people NPVing (checking net present value) everything to death and finding a reason not to take the plunge.”
Mr Twigger questioned where the next generation of market leaders would come from, referring to the “Bill Beaments (Northern Star Resources), Jake Kleins (Evolution Mining) and Raleigh Finlaysons (Saracen Mineral Holdings) of the world”.
“People seem to be nervous about getting in the pool but if you take the dive, the market will get behind you and if you end up doing a bombie, you’ll still probably get away with it,” he said.
Research by HLB Mann Judd last week showed almost one-third (32) of the 110 new IPOs on the Australian Securities Exchange last year were resources stocks and 21 of these were WA companies while data released by the Australian Bureau of Statistics in December showed WA’s exploration industry hit its best quarterly spending levels in September for more than three years.
Association of Mining and Exploration Companies chief executive Warren Pearce said juniors were finding it noticeably easier to raise cash in recent months.
“Before, when companies would go on a roadshow, they’d have five to six institutions fronting up but now it’s more like 15 to 20. There’s definitely a lot more interest,” he said.
Mr Pearce said people like Bill Beament only became known after they had achieved success so it was too early to say who would emerge as the next generation of mining entrepreneurs.
Azure Capital partner Simon Price said money was returning to the junior resources sector and, though it hadn’t yet translated into much M&A activity, a recovery was under way.
He said juniors were ramping up exploration and assessing new projects and more individuals were forming small companies targeting commodities such as lithium, graphite and gold.
Mr Price noted the Resource Information Unit’s explorers conference later this month had been expanded from two days to three because of the number of companies eager to present.
Euroz executive chairman Andrew McKenzie said he believed interest in resources in WA had been strong recently with deals being done and projects being bought.