Diggers and Dealers: Who’s running as far as they can from investment bankers?
Things are coming to a head in Kalgoorlie, but if you believe the poker faced analysts around the Diggers and Dealers Mining Conference it’s more a Guinness pour than a Crown Lager.
We’re all waiting patiently for the froth to subside and get some clarity on what’s really happening in the mud-coloured draught.
How high will Liontown’s (ASX:LTR) Kathleen Valley lithium costs run and should it have sold out when Albemarle came calling?
When will investors give a s**t about gold again?
How many five acre plots in Denmark will be consumed by ionic clay rare earths that will, we’re sure, be developed over the next decade?
All this and more will wash up in time.
Diggers and Dealers is a hive of activity, connecting brokers and investment bankers from the freewheeling Skaseian east with miners from the wild Bondian west.
It’s not quite the splash-happy days of the mid-’80s. But with miners holding a boatload of cash there’s no shortage of M & A men around to pop a leak in it.
As we’ve opined before, the buyer is rarely on the right side of the deal.
So it seems with the ASX-listed gold sector’s foray into North America, which has so far been remarkably consistent in its tragedy. They may all work out someday, somehow, but look at Northern Star’s (ASX:NST) Pogo, Evolution’s (ASX:EVN) Red Lake, Silver Lake’s (ASX:SLR) Sugar Zone and St Barbara’s (ASX:SBM) Atlantic Gold and marvel at the furnace that has burnt investors’ cash into ashes to scatter wistfully into the Great Lakes.
It’s all mystified West African Resources (ASX:WAF) executive chairman Richard Hyde, who has seen gold producers literally fly over the $80 million of cash his Sanbrado mine in Burkina Faso is churning out each quarter, along with similar top-tier assets like those being mined at low costs by peers like Perseus Mining (ASX:PRU).
“So our business is not driven by M&A bankers. And I think that’s the thing, like a lot of these groups that went to Canada, they were pitched ideas by M&A bankers saying you should use your market cap to buy assets in North America because … the relative valuations are higher in Australia per ounce,” he said.
“So you can you can buy accretive ounces in North America, which is what they did. So Northern Star, St Barbara, Evolution, they all went and did it and I don’t think any of them have worked.
“So I’m a geologist. So geology comes first. I kind of joked about in my presentation that I probably should have gone to Argentina because they’ve got rugby, wine and steaks. But, you know, I went to West Africa as a 24-year-old geologist.”
Are West African miners undervalued? It’s been a massive talking point around the traps in Kal.
The mining industry is known for its proliferation of imaginary awards, many worth less than the granite the inevitably misspelled totem handed out to its lucky winner.
We went on a deep dive of Gina Rinehart’s National Mining and Related Industries Day Awards to find past winners, just to see if the mining billionaire has ever given herself the prestigious prize.
To no avail. Maybe the documentation has been called as evidence in WA’s iron ore trial of the century and pulled from circulation.
There is a media award at Diggers. We’re sad to report our campaign for Stockhead’s germanium correspondent Drummond Wilfrid Bissette, blood type A-, has fallen on deaf ears thanks to a disinformation campaign led by the Chinese Government.
No idea who’s winning the thing. But we haven’t seen Drummond for a while. Let us, or ASIO, know if you find him.
Our money for the other, very much respected and desired Diggers and Dealers prizes are centred on lithium and rare earths companies.
The Best Emerging Company award was once known as the kiss of death for the Fredo-like fate of the companies who had the misfortune to win it. But it’s turned a corner lately.
Maybe it’s a bit early, but their discoveries look like potential monsters, following in the footsteps of recent winners De Grey Mining (ASX:DEG), Liontown Resources (ASX:LTR) and Chalice Mining (ASX:CHN), all ASX 200 players.
Deal of the year is a tough one. They won’t win it, but we’d love to put a nomination in for Western Areas, who convinced IGO (ASX:IGO) to part with over $1.3 billion for their WA nickel business and infamously blown out Cosmos mine.
IGO has flagged an $880-980 million write-down on the asset — revealing the true magnitude of the seller’s triumph.
Digger should be Pilbara Minerals (ASX:PLS), currently earning more than the economy of a Carribbean tax haven each quarter from its Pilgangoora lithium mine.
The GJ Stokes Award for lifetime contribution to the industry is up in the air, we’ll let you take your pick. Betting on this one is a bit like punting on golf.
Happy tipping, we’ll reveal the real winners tomorrow.