Small event, but some big fish showed and Perth Media will return in 2019.
HK Mines and Money 2018 Top Take Homes: Karratha is predicted to be one of world’s key mining cities; massive global quant funds using AI to trade in the milliseconds after ASX announcements go up; some traders are sending in drones to check on minesite activity and then shorting the stocks; others are monitoring companies with google earth and algorithms linked to social media to pick up emotive responses to companies; and many investors are switching on lie detectors on their smartphones to gather information on company leaders.
While not as many attendees as the last time I attended in 2010, speakers were excellent.
1. Karratha and Pilbara to Rocket. Heavyweight international investors raved about the potential wealth development in the Pilbara, Western Australia. Many were making a real attempt to increase their own Pilbara knowledge, especially in the wake of China’s One Belt One Road expansion policies. Netherlands-based Willem Middelkoop, founder and chief investment officer of the Commodity Discovery Fund, says Karratha will be a major regional mining city in future. Keith Spence (Canada-based Global Mining Capital Corp) also has WA companies with Pilbara assets firmly in his sights.
2. Investors Switching on Smart Phones with Lie Detectors/Drones Checking Minesite Activity. Frank Holmes, US Global Investors, was a standout speaker. He claims 70 per cent of stock trades now are done by quantitative funds (quants) using algorithms and artificial intelligence. Where once banks and big institutions focused on building teams of traditional finance analysts, things had rapidly changed. Claims were made that Vanguard, for example, has 50 people working on AI. Data collection is cheaper, easier and more efficient than ever. Fund managers are also switching on lie detectors on their smart phones when they took conference calls from MDs of mining companies, some investors targeting stocks to short were sending in drones over minesites to check real activity. One trader used google earth to monitor car parks of US department store Sears to check if company announcements accurately reflected actual visitors to stores. IE they counted the cars remotely. Some superb tips on how to strategically link your real time communications strategy to a rising stock price, in a fast-changing world. But you will have to sign up Perth Media to learn more about that! The quants are trading in milliseconds using emotive algorithms. While it was clear some knew much of this already, some miners in the room were bemused. ‘Don’t be intimidated by it, but you have to know what is going on,' Holmes said.
3. 6 Minute Pitches. Holmes again. He bluntly advised: if you want millennials to invest in mining, make your pitches efficient and concise in 6 minutes. No one wants to hear hour-long explanations of maps. If pitches didn’t improve and trading wasn’t made easier, the mining (particularly juniors) will continue to lose investment to easily-tradeable cryptocurrencies.
4. Beware of letting risk adverse lawyers crush your press release. Your company’s narrative is crucial. If overly cautiously, your stock will fall, says Holmes.
5. One Belt One Road. Rather than a resurrection of the single ancient Silk Road, this is more like a big octopus. It is a policy that is like many tentacles of many roads, leading to many joint projects in various countries, particularly Mongolia, Kazakhstan, Australia. There are many many more regions that have been earmarked by central Beijing for supply of raw materials for mega infrastructure such as bridges and rail networks. Jay Roberge, of Tehanna Capital, advises all, to seriously upgrade your China IQ. Last year the first cargo train went non stop from China to London, and don’t forget that China has put environmental protection at the top of the list of priorities. That policy will impact on decision making. All speaking agreed One Belt One Road will mean long-term huge demand for iron ore for steel.
6. Intellectual Capital is Gold. Rick Rule (Sprott US Holdings), another heavyweight, reminded younger, less burnt investors, to follow intellectual capital and look less at the physical asset and the mineralization of the juniors, but more at the entrepreneurial leadership. ‘That strategy has served me very well over time,’ he said.
After being burnt from investing in California, he says: ‘the most dangerous politician is the one closest to you.’ He prefers tier 1 deposits in tier 3 countries to tier 3 deposits in tier 1 countries. And don't forget. ‘Investors are not rational,’ Rule said.
- Cate Rocchi, Perth Media CEO
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