2015 Broken Hill Resources Investment Symposium - Lion Selection Group - Hedley Widdup
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Lion Selection Group, Hedley Widdup, Executive Manager. Investor Presentation at 2015 Broken Hill Resources Investment symposium.
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2015 Broken Hill Resources Investment Symposium - Lion Selection Group - Hedley Widdup
- 1. First Swallow of Summer ? The mining cycle, time for optimism Hedley Widdup May 2014, Broken Hill Lion Selection Group BUILDING EMERGING MINERS People • Projects • Opportunities ASX:LSX
- 2. 2014 Retrospective • Worst is behind us • Catalysts – M&A – Exploration – Commodities – Return of risk money • China – still an important mining investor • Cycle – was 4 o’clock this time last year
- 3. Market for Miners Source: IRESS Data Turning point for sentiment - Miners begin to keep pace with market Mid 2013 Miners (large and small) out perform market Pre 2008 First GFC collapse Then market recovery Miners move in line with market 2008-2011 Miners collapse, first alongside market, but then ~2 years of underperformance Steady deterioration in liquidity 2011-13 Iron ore collapse – another (brief) phase of miners underperformance Mid 2014 Miners underperform broader market May 2014
- 4. Liquidity: IPO’s and RTO’s Mining IPO’s RTO’s: Mining project into Mining shell Mining project into Non-Mining shell Non-Mining project into Mining shell Source: IRESS Data, ASX, Company reports • IPO market closed but • RTO’s have been steady and now outnumber IPO’s (2015 on trend for increased RTO volume)
- 5. Mining M&A Future and Potential divestments: • Nickel West (BHP) • Cripple Creek, Victor, Sadiola, Yatela (Anglogold) • Base metals IPO (Vale) • Brio Gold IPO (Yamana) • Telfer (Newcrest) • Cowal, Porgera (Barrick) • Acacia shareholding (Barrick) • Lonmin shareholding (Glencore) • Rustenburg (Anglo) AcquisitionsDisposals Selected major miners only (BHP, Rio Tinto, Barrick, Newmont, Anglogold, Newcrest). Horizontal axis not to scale. Source: Company reports, newswires Transactions dominated by disposals ? BHP/RIOMerger BHP/RIOIronOreJV BHPPotashCorpT/O • Major miners have been sellers for more than 2 years – selling to pay down debt • Buyers are Mid-tier
- 6. Financial condition of microcap miners Funds Raised: • Exceeded by exploration plus development Admin + Excess Expl / Dev: • Has been funded from cash reserves Source: IRESS data. All figures are MEDIAN of population, consisting of ASX listed Materials – Metals & Mining classified companies capitalised at less than $100m at 30 Oct 2014 (producers, service companies and metals recyclers removed) Cash Balance Median quarterly cash flows of junior resources sector 2011 – 2014
- 7. Mining Cycles Source: IRESS Data BHP ASX100 Res ASX Small Res 1974 1983 1988 1999 2008 2013 1974 - 83 • Korean industrialisation • 1980 gold bubble 1983 - 88 • 80’s equity speculation • Copper spike 1988 - 99 • Early Chinese industrialisation • East Asian Currency Crisis and Bre-X fraud 1999 - 2008 • Chinese industrialisation • Biggest mining boom ever ? • Global Financial Crisis 2008 - 2013 • Equities re-started by economic stimulus • European Debt Crisis – death of 1,000 cuts
- 8. 1997, 2008, 2012/13 2004-07, 2010-11 Catalysts • M&A • Exploration • Commodities • Cyclical return of risk money
- 9. www.lionselection.com.au LION SELECTION GROUP BUILDING EMERGING MINERS People • Projects • Opportunities SPECIALIST LISTED INVESTMENT COMPANY ASX : LSX