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Juniors hope for summer blast
t may have been six weeks earlier than the tally, no algorithm currently has the capac-
Irest of the country but summer had already ity to assess exploration risk and return,”
started for the exploration sector last month Twigger said.
according to Liam Twigger. “Junior explorers are completely avoided
Speaking at the Australian Nickel Con- as an investment class. The other impact is
ference, Twigger said that while producers from the artificially low global interest rates
had thrived this year, interest in the junior and around the world they are probably 3%
exploration sector has been cool, but the lower than where they may otherwise be
winds of change were appearing. due to quantitative easing. How does this
“Explorers having no cash flow have affect the market? The only place to be if
been caught in the crossfire from the rush interest rates are falling is owning shares in
of retail investors into ETFs and the global a cash flow producing asset or company.”
push to keep interest rates down. The up- Legend Mining Ltd managing director
side is that those that have production and Mark Wilson is well aware of the struggle
cash flow are in great shape and have enor- juniors are facing, particularly those pio-
mous leverage over juniors,” PCF Capital neering greenfields pastures.
managing director Twigger said. Legend is preparing to start drilling at
“There are some fabulous opportunities Rockford in the Fraser Range and Wilson
for acquisitions, JVs and corporate deals hopes to expose signs of the next Nova
and we’re already seeing that under way. nickel project in the making.
We also note that the retail investors might “It is tough and I guess it comes down
be finally waking from their slumber as ex- to the promotion of your company and
plorers are in fact up 32% over the last three targeting where you are going. I know the
months on the back of renewed volume and funds and high net worths’ interest in these
interest; so, summer is coming.” companies [Western Areas Ltd or Mincor
The dearth of interest in the junior sector Resources NL] but I wouldn’t get on their
could be attributable to a lack of discovery radar because I have walked in and used
success and the changing landscape of an the words greenfields exploration and they
investment market in the grip of technologi- have gone straight away,” Wilson said.
cal disruption. “It is a totally different experience than 10
“The majority of gains over the last 12 years ago. There was a market 10 years
months are being felt and experienced ago where greenfields stories were accept-
at the bigger end of town and this reflects able in any broking office. Now, you have
another remarkable development over the to qualify where you get your funding from
last 12 months,” Twigger said. “According whereas in the old days it was back to the
to Morning Star, September 2019 was the brokers office to qualify the explorers to
first month in human history that the sum place their funds; it has just flipped.”
of money managed by the passive index- Wilson said it was imperative for any com-
tracking and ETF funds and algorithm- pany to have favourable sentiment running
based funds exceeded that managed by for their stories to be heard in the market
humans. That is the first time ever we have and hoped his prediction of a nickel price in
had the financial robots controlling the mar- 12 months’ time of plus-$US18,000/t would
kets.” spur interest in the sector, as the effect of
With financial robots exuding influence, Indonesia’s export ban took hold.
the speed and make-up of the stock market “I think the nickel market is poised to
has been interrupted, bringing into question pop,” he said.
the purpose of markets, the Liam Twigger “The Indonesia thing is real
impact on the wider econo- and what the LME purchases
my and global financial sta- September 2019 was the first you can only assume is to
bility. “ feed China because of the
Meanwhile, Twigger add- month in human history that the ban. I hope it goes pop which
ed, the changing dynamic in sum of money managed by the passive will make next year a good
investing had ramifications year.”
for the junior sector. index-tracking and ETF funds and – Mark Andrews
“[It] also provides the ra- algorithm-based funds exceeded that
tionale for the lack of invest- Full coverage of Paydirt’s
ment in juniors, with many of managed by humans. That is the first Australian Nickel Conference
them too small to be on the time ever we have had the financial starts on page 30
radar of the ETFs or index-
tracking funds. Fundamen- robots controlling the markets.
aUSTRaLIa’S PaYDIRT NOVeMBeR 2019 Page 5
