Sunday 23rd October 2016

Resource Clips

Calm after the storm

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People comprise his second criterion. But a resume boasting experience with big-name companies doesn’t necessarily impress him. He’s more concerned with an individual’s understanding of the project.

Next he considers a company’s capital structure. Besides share structure, Simmons wants to know how much cash is in the kitty and how much the company needs to meet its objectives. Spending must be conservative but realistic at the same time, he emphasized.

Despite “exceedingly difficult times,” Simmons maintained, there’s probably more potential available than many people realize.

Pollard’s perspective comes through his work as an industry headhunter. Five years ago he began surveying the sector for his Mining Executive Outlook report, which he calls “an opportunity to get inside the heads of those at the helm of the resource companies.” He gave the audience an advance look at his latest report, formally released September 30, of 162 executives for TSX- and TSXV-listed mining and exploration companies.

Some 71% had market caps under $50 million, “a function of the market,” he said. “There are a hell of a lot more smaller companies than there were.”

Overall, “what we are seeing is that we’re in the midst of a recovery, no matter how tepid it is at this point,” Pollard added. Although “short term sentiment is obviously pretty bleak, the pessimism has clearly dissipated among executives.”

Pretty much it comes down to that episode of Seinfeld where George realizes that every instinct he has about women is completely wrong. If he does the exact opposite, he’ll actually be right.—Andrew Pollard, president of Mining Recruitment Group

Fifty-two percent of respondents expressed a bearish outlook for the next six to 12 months. Bad as that sounds, “it’s actually a lot better than it was three months ago, where 64% of you thought it was going to be pretty tumultuous. More executives are actually bullish, going from a ‘whopping’ 9% to 11%. But what we are seeing is that more people are going from the bearish side of things to a neutral level. Long term? Everyone’s quite positive, 74% of executives think it’s going to be a bullish three years ahead of us. Only 4% of you think it’s not going to be very good.”

As for raising capital in Q4 compared to the last six months, “only 17% of you guys think it’s going to get any easier. Twenty-five percent expect things to get a little more challenging this quarter.” About 58% expect little change.

The survey’s bad news is “a foregone conclusion that the markets will not turn around in the short term in a meaningful way,” Pollard said.

The good news? “Everything I just said doesn’t really matter.”

In five years of conducting the surveys, he’s learned that “the general consensus among executives [of what’s] going to happen is almost invariably wrong.”

This time last year “only 11% of executives held a bearish outlook for the next 12 months.” Just 3% said it would get worse.

“Pretty much it comes down to that episode of Seinfeld where George realizes that every instinct he has about women is completely wrong. If he does the exact opposite, he’ll actually be right.”

On that, Pollard ended the event with the most positive comments heard that afternoon: “Perhaps the negativity so rampant among executives signals that now’s the perfect indicator of what could be a massive turnaround already in the making.”

The Vancouver Junior Mining Seminar also presented expert advice and info from Erez Bahara, a partner in Davidson & Co chartered accountants, Jonathan Lotz, a partner in the law firm Heenan Blaikie, Andrew Creech, team leader for listed issuer services with the TSX Venture and Andrew Richardson, deputy director of corporate finance for the B.C. Securities Commission.

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