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How To Get On The Radar

How Can Mining and Resource Companies Get Onto the Radar in the Media?

Why do CEOs of junior explorers get it wrong when telling their story?
RN: CEOs of junior explorers often struggle to tell their story simply. In nine out of 10 mining-company presentations, the information is the wrong way around: too much technical detail at the start and key information about the people involved buried at the back.

What would be your recommendation on preparing a company’s communication plan?
RN: Getting early advice on the company’s communication is money well spent, the CEO needs someone to scope up a background on the management team, put together a compelling PowerPoint presentation, ensure the company speaks in a language the market can understand, and gets it messages across in the right order.

The next step is finding a balance between promoting the company and overselling it. Some CEOs tend to over-promote their company’s position and lift market expectations too high. It’s a fine line: you need to get the market excited to raise capital, but in a way that is accurate, balanced and consistent.

What relationships should CEOs be looking to build within the industry and the media?
RN: Identifying key market influencers is critical, CEOs should very early on know which analysts, brokers, fund managers and journalists are most important for the company and set out to build long-term relationships with them. It’s always better to have fewer relationships of higher quality, with people who understand the story from the beginning, than take a scattergun approach by sending press releases and market updates to everyone.

What is the best IR approach and balance for CEOs to take when it comes to marketing their company?
RN: Mining and Resource Company CEOs need to decide how much time they will devote to IR and which channels or events provide the best return. Many CEOs spend too much time trying to mine the market rather than mining the ground. You don’t want the CEO on road shows or at conferences every few weeks, or the company continually sending out announcements. It’s better to focus on a few key communication events every year and do them well.

What can companies do to engage with investors and get the message out?
RN: Maximising existing communication, such as quarterly reports, is a good start. Often, a company update or executive summary is not included in the quarterly cash-flow statement and it becomes a very dry financial statement. This communication is a lot more effective if it is topped up with a succinct executive summary explaining the company’s progress that quarter and maps it against its milestones and timetable.

Improving the IR component of the website is another opportunity; too many mining-company websites do not have a strong IR section. In this digital age, you have to provide information that is transparent, immediate and accessible to investors worldwide. If you don’t, you are missing a huge opportunity to reach current and prospective investors.

What alternative channels are available to CEOs to reach people and investors in the industry?
RN: Trade publications and investment newsletters that cover resource stocks are useful IR channels. A lot of newsletters and mining magazines are well read by people in the industry and those who invest in it. These publications are especially important for exploration companies that are not researched by broking firms and need an independent endorsement of their story.

Social media is also underutilised, mining companies must keep an eye on investment forums such as Hot Copper to understand how the market perceives them. Yes, a lot of people post using pseudonyms but some of the feedback can be useful from an IR perspective. Twitter, YouTube and other social media channels are cost-effective ways for mining companies to get their message out there quickly in a global market.

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THE BOOM PHASE BEGINS

9 O’Clock

The seeds of the recovery are now sown and eventually share prices will rise as un-employment, which is often regarded as a lagging economic indicator falls. Share prices move through a period of gradual increases from 6 o’clock until about 11 o’clock as commodities increase in price, overseas reserves are rebuilt and money becomes easier, subsequently property again becomes an attractive investment opportunity.

10 O’Clock

The improving economy leads to more aggressive market highs. A frenzy of interest and speculation begins, marking the beginning of the end of the recovery phase, which peaks when the economy is booming and everyone believes the good times will never end, as overseas reserves continue to rise.

11 O’Clock

More spending on government projects and infrastructure occurs in this phase, to create jobs, which increases the demand on private sector businesses. This in turn results in employment of more staff to cope with increased production needs. Lower interest rates then prompt businesses to borrow and invest in capital projects. Well before the Clock strikes midnight, wise investors have exited shares and are looking for the next investment opportunity.

8 O’Clock

During this time, companies are forced to become leaner and increase productivity. These measures and the slowly improving economy translate into increased company profits and this gradually stimulates share prices to recover. Investors who come into the market at this level often see excellent gains in the years ahead.

7 O’Clock

A recovery from recession begins with increased government spending and a sustained easing of interest rates. Interest rates fall to historically low levels and eventually a point is reached where long term investors see value in the market and start to accumulate the better performing shares – often you don’t need to look any further than the Top 50 companies for investment selection. With a lower demand for money and interest rates falling the economy is stimulated and share prices begin to slowly rise. Cash is no longer King and the value net of inflation begins to erode.

DEPTH OF THE RECESSION – THE RECOVERY PHASE BEGINS

6 O’Clock

6 o’clock marks the peak of a downward swing in the economic cycle. Investors are now either too scared, or cannot afford to borrow money and in response, interest rates slowly start falling. Individuals are now trying to pay off debt and spend less where they can, as well as trying to keep their jobs. A severe contraction in the labour market is often evident in this phase of the Clock. This can exacerbate recessionary deepening, unless correction through government fiscal and Reserve Bank monetary stimulus, and the return of business confidence becomes apparent.

5 O’Clock

Poor business confidence means that new capital ventures are postponed and Initial Public Offerings become a thing of the past. This is a time when capital is near impossible to raise and banks are not lending. Less spending and higher interest rates result in lower demand, which results in less production. Consumer confidence is at a very low level with demand for goods and services coming under enormous pressure. With fewer sales there is a squeeze on earnings, resulting in profit downgrades; and economic rationalisation becomes a hot topic in the boardrooms. The economy slows to the point where productivity stalls and then declines. When this happens for two consecutive periods the economy is said to be in a recession.

4 O’Clock

Decline into recession begins as business confidence starts to fall and consumers stop spending. Investors find little value in either shares or property and with impending trouble on the horizon fixed interest securities and cash become popular again – Cash is now King. A flight to quality assets occurs to protect what remains of an individual’s wealth. Often the gold price escalates at this time as it is seen as a store of value against worsening economic conditions. The dollar can also come under pressure to find the right level of adjustment in line with the prevailing economic ill winds relative to the rest of the world.

THE RECESSION PHASE BEGINS

3 O’Clock

Before the Clock strikes midnight, savvy investors have exited shares and are looking for the next opportunity, having realised that there is likely to soon be a correction in the market. 3 o’clock sees the realisation of this correction and the consequences that will inevitably follow. Subsequently, more people are selling shares within this phase and the lack of demand triggers a sell off, a slump in share prices occurs and coupled with falling commodity prices the decline accelerates. High interest rates, still persisting at the beginning of this cycle, slow the economy and lead us into the beginning of the recessionary phase.

2 O’Clock

The rapid growth of the property and sharemarket cannot be sustained for more than a few years and eventually the economic slow down becomes apparent. Interest rates continue to increase until it is no longer viable for purchasers to continue investing in property and soon supply outstrips demand. As interest rates rise companies find it harder to make profits and this, combined with the booming property market and the fact that fixed interest investments now seem more attractive, causes share prices to begin to fall or at least plateau.

1 O’Clock

As property purchases are primarily funded by borrowing; the increased demand for funds causes the cost of funds or interest rates, to rise. The Government recognises that the economy is overheating and introduces measures to enable a ‘soft landing’, by increasing interest rates to flatten demand by consumers. Often the inflation bogey can rear its ugly head in this period and monetary policy in the form of interest rate increases can be used to keep it in check. If the Reserve Bank over corrects in this period by raising rates too quickly and too high, it can cause the market to come to a grinding halt.

TOP OF THE BOOM – THE SLOW DOWN PHASE BEGINS

12 O’Clock


Boom Time is a period of greed and excess. Consumerism is at its most extreme, full employment provides for maximum optimism and a feeling of real and sometimes imagined wealth exists, where investors believe that the favourable conditions will continue indefinitely. A whole range of new players come into the sharemarket at this level, and often regret having little or no knowledge, relying only on what others have told them- that sharemarket investment ‘is easy money’. Smart investors get out on the way to and at the top of the boom by taking their share gains and moving into real estate as part of a longer term wealth creation strategy. At this stage of the phase, the rapid increase in the demand for real estate often pushes demand above supply and results in an increase in property prices. Property prices may rise well above real value and can come back to bite you later, if you have excessive gearing.