Directors Of Junior Mining Companies Have To Improve Communications In Current Conditions: Not Hide
Charles Wyatt
minesite.com
When Marc Bolland took over as chief executive of Morrisons Supermarkets last year he had a couple of handicaps. First he had no experience of retailing to offer, and second he was a Dutchman. Not easy when running what had become a major group operating largely in the North of England. The first thing had did was get in touch with all analysts and journalists who might be covering the company and gave them his mobile telephone number, “if you have any questions ring me up and we’ll go through them,” he said. “If I can’t answer immediately, I promise I will get back to you as soon as possible.”
With that one gesture he had them on side, so why is that that so many chief executives of small to medium sized mining companies are so miserly with their contact numbers? A case in point is Nautilus Minerals, a company in sub-sea mining, which grew very fast and raised a lot of money from 2005 on as the potential profitability of such an operation came to be appreciated. David Heydon, the founder and chief executive, was a charming and very approachable man and this was key to early success. He has since retired and a man called Stephen Rogers has taken over. The atmosphere has changed from warm to frosty. A call to Rogers or, for that matter, the chairman Geoffrey Loudon, is met by a blocking response at operational headquarters in Queensland. “No, neither can talk at the moment. No, you cannot have a mobile number. We will try to get one of them to call back.”
Thanks a million. No one ever rings back so a journo can only assume the worst when reading the latest release which says that the company is delaying the construction of the equipment for its Solwara 1 mining system. That is the point. Chief executives who are not contactable and forthcoming in these difficult times will not get the benefit of the doubt. We have been here before, after all, back in 2002 when metal prices were very similar and directors had to work hard to raise money and merit a share rating. On 7 April 2002 Minews wrote the following piece: -
“It may be akin to teaching one’s grandmother to suck eggs, but it is a fact that its directors are the best public relations advisors a company has. Or they should be. In the cases of AngloGold and Gold Fields, two of the top gold producers in the world, this lesson has been learned well. Bobby Godsell and Chris Thompson keep their doors open for journalists with minimum intervention from gofers.
Lonmin is about half the size of these two companies, but with a market capitalisation of £1.6 billion it is no lightweight. The lesson has not been learned here by the new chief executive Ed Haslam who is less than accessible and the portals are guarded by the same PR firm that looked after Tony Rowland, Dieter Bock and Nick Morrell. Whether or not this is the reason why the company has such a modest rating, it is time for a change.
Xstrata has just zoomed into London and raised more money than it originally thought possible at £850 million. When Mick Davis and his investor relations adviser Marc Gonsalves were at Billiton in their previous lives they only spoke to managers of major funds and journalists at the Financial Times and Wall Street Journal. Maybe this time around they will realise that all manner of investors and media have their uses and that they would not want Xstrata to pick up Billiton’s tab as the company that investors most loved to hate. Time for a change.
These are big companies. How much more important it is that directors of mid tier and junior mining companies make a positive effort at promotion. This does not mean peddling a load of old rubbish, but ensuring that news is released in an efficient format with headings and bullet points as well as a succinct background description of the company involved. If there is a load of technical data, simplify it and explain the implications. Most investors, fund managers included, are not geologists, mining engineers or metallurgists. They follow people and projects and will stick with companies whose directors are approachable and helpful.”
It also helps journalists if they are alerted to the fact that something of interest has been announced. And this is another point. There are news releases and news releases. By and large, quarterly reports contain little that is new. There may, however, be a small nugget hidden away in a lot of boring text. The director who bothers to pick up the telephone himself, not through a PR, and points a journalist towards it earns a lot of brownie points. This is a two- way business so now there is no excuse for not doing so. My mobile number is 0044 7836799949, Alastair Ford’s 0044 7818410728.
As already pointed out we have been here before in 2002 and whenever things are difficult new opportunities appear. Bear markets only last a limited time as investors are natural buyers and the bottom fishers are already at work. Two things chief executives have to do in these times. First, rid themselves of all memories of share prices in 2007 and early 2008 and second, maintain a proper presence in the market. There are plenty of companies whose directors are doing less than nothing in the hope that they can pay themselves until things improve. Things will improve, but not for these companies as investors will ignore them.
The focus will then be on companies with approachable directors, good projects and business plans which make sense under current conditions. Even if the banks are in a mess of their own making funds have money, but the managers will be very selective. No longer is Philip Richards of RAB Capital around to pick up discounted shares in companies which should never have seen the light of day. Placings may appear to be dilutive at current prices, but if the money helps to add value they will be worthwhile. There should also be a spate of beneficial mergers and directors should not let their personal pride stand in the way. Go to it. We shall be watching and commenting without fear or favour. Keep in touch to make sure we have all the facts. |
