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Investment strategies

Tips for mineral explorers.

With the equity market warming to early-stage resource investment, the copper success seminar ‘Tips for Mineral Explorers for Attracting Investment’ proved timely.

Held in February and specifically tailored for junior explorers, the program delved into methods that exploration companies can adopt to more effectively attract investment for their projects, and how to prepare suitable business structures to attract business partners.

Tom Paltridge, Director Tax at Grant Thornton, spoke on ‘Making the most of the Junior Mineral Exploration Tax Credit scheme’. (Photo 416530)
Tom Paltridge, Director Tax at Grant Thornton, spoke on ‘Making the most of the Junior Mineral Exploration Tax Credit scheme’. (Photo 416530)

Sharing their insights were:

  • junior exploration company Investigator Resources
  • independent equities provider PAC Partners who specialise in capital raising for emerging and mid cap companies
  • Prominent Hill copper miner OZ Minerals who has actively engaged junior explorers in greenfield projects across South Australia
  • assurance, advisory and tax firms PWC speaking on business structures and Grant Thornton outlining developments in the Junior Mineral Exploration Investment scheme.

While there was no one formula for success, speakers pointed to the fundamentals of aligning business strategy and the capital-raising pitch to the timing in the market cycles, as well as:

  • the risk profile of the project and risk appetite in the market
  • the inherent value proposition of projects
  • the people and company capabilities behind them.

A repeated theme for the junior exploration segment was to ‘share the importance of ideas for making discovery and the strength of ideas to the market, backed by technical know-how’, but doing so with a simple message and a clear business structure.

Helping to revitalise the discovery space, South Australian junior explorers highlighted the role of the Geological Survey of South Australia and its exploration initiatives as giving them a competitive advantage, complementing discovery programs by enhancing datasets. The Geological Survey’s strong skill set in magnetotellurics – a geophysical modelling technique that can highlight metal conductivity in the crust – was able to add value by highlighting prospectivity from the bottom up, as compared to the traditional approach of drilling down.

When it comes to seeking joint venture partners, various scenarios illustrated how cultural fit, technical know-how, equity in customer bases and market reach are important factors in the equation.

For OZ Minerals, beyond the expectation of finding junior partners able to bring ideas and concepts to copper exploration, the cornerstone of forming a successful joint venture lay in finding a partner with a reputation for safety and trusted relationships.

Apart from dealing with super cycles in commodity markets, share-market equity specialists showed there was merit to be ‘ready to roll’, especially in the months of March–April, May–June and October–November when investors were active, which usually meant a six-month lead time was necessary in paperwork and lodgements.

In equity-raising markets, the trend for more digital marketing is taking hold, enabling prospective investors to be targeted on the basis of their online-search history, complementing standard ASX releases.

The program finished with speakers noting among South Australia’s strengths its welcoming approach, proven pedigree with large iron oxide – copper–gold deposits and mines, and new ideas and concepts in understanding mineral systems – bringing to life very good exploration potential across vast spaces.

South Australia seeks to treble its copper production by 2030 – a goal that is well on track following February’s major milestone at BHP’s Olympic Dam with a $350 million smelter upgrade, setting the operation up for significant growth.

Keep up to date at the upcoming ‘Copper to the World 2018 Conference’ on 26 June 2018 at the Adelaide Convention Centre.

– Grace Taylor

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