Diggers and Dealers 2013: The Capital Strike
GUEST CONTRIBUTOR: Tom Magee reflects on the recent Diggers & Dealers Conference.
Tom Magee is a director with executive search and organisational advice
consultancy Guest Magee specialising in the Resources industry.
Diggers and Dealers was a somewhat subdued affair this year. Numbers were down with many of the usual suspects missing in action.
In a quick ring around in the week or so prior to the Kalgoorlie extravaganza a significant number of MDs and CEOs said they were too busy trying to raise capital, finalise scoping studies, PFS’s, saving money or simply doubting the worth of the conference to come.
While the West Australian juniors were there in good numbers, there weren’t too many Eastern Staters in attendance.
The conference started with a buzz after Prime Minister Kevin Rudd announced the Federal election will be held on 7th September.
I will leave that subject to others of the commentariate to discuss other than to say the announcement seemed to have a cathartic ‘at last’ effect on those attending.
The marquee speaker was Austan Goolsbee, chief economic advisor and fundraiser for United States President, Barack Obama.
Goolsbee was upbeat to the point of being hyperactive on the global economic climate and Australia’s economic prospects.
It is no surprise that he is a favourite on the US talk show circuit; he was certainly a change for those of us used to a steady diet of Saul Eslake and Robert Gottleibson.
It is probably most significant he said he did not know what was going to happen to the gold price.
Perhaps unsurprisingly, Marcus Grubb, head of the World Gold Council was far more bullish about the yellow metal.
His upbeat view was supported by Richard Weston, head of Gold Fields Australian operations who advised the conference that the company was pursuing acquisition opportunities here.
AngloGold Ashanti added to the mood by announcing that its massive Tropicana project was ahead of schedule with first gold to be poured during the current quarter.
At the smaller end of the market, all were buoyed by the Doray Minerals story. First gold has been poured! Congratulations to Allan Kelly and his team.
In conversations with numbers of people, there appeared to be an emerging view (some would call it hope) that the market had bottomed.
The optimists could even give examples of green shoots showing through the currently barren terrain.
Others were more sanguine, though most admitted to being hopeful.
It would be incorrect to say that the elephant in the marquee was the capital drought or strike as some were calling it.
Speaker after speaker commented on the dearth of capital.
Juniors with impressive PFS/DFS stage projects armed with investment grade NPV’s and IRR’s were stalled with no money nor the prospect of getting it any time soon.
There were some wonderful opportunities on offer for the squadrons of bankers and analysts in attendance.
Most of them looked younger this year but that‘s probably just me. Those I talked with seemed to be focused on maintaining existing relationships rather than exploring new opportunities.
The iron ore miners remained determinedly bullish prices would stay around the $130 mark, albeit with the assistance of a weaker dollar; pointing out, with some justification that seven point something per cent growth in China is still impressive by any measure.
This in contrast to the analysts’ bearish sentiment for this and indeed, all metals. The less said about coal the better.
As ever, metals prices and the performance of resource houses on the Australian Securities Exchange and elsewhere were pored over constantly and were front and centre in conversations, including those participated in, overheard and presented at the Kalgoorlie Arts Centre.
The Palace and Exchange hotels weren’t pulling the same crowds as they have in previous times but, as ever, the mining fraternity and their fellow travellers turned up and compared notes.
As one wag put it; ‘we all know what happened to Hanrahan… the drought did break and he was drowned!’ (Apologies to John O’Brien)
We had an informative and enjoyable time. May your grades and recoveries be high and your costs low.
Most importantly; raise those funds! See you in 2014.
