I was reviewing a project this week, a Cu-Ni-PGE advanced stage project in North America. On my way to their NI 43-101 technical report I had to wade through what is the usual marsh of marketing rubbish that is known as the “junior explorer website”. I review a lot of early and advanced stage projects and I can count on my one hand websites that I have come across that are actually attempting to present their results in a truthful and conservative (wise) way.
Eventually I realized the company mentioned did not even post their NI 43-101 report on their site. No, you had to go over to the SEDAR website and do a little advanced search. That’s the mandatory Canadian document filing system for listed companies. The geology and resource section was beautifully decorated, naturally, with the main emphasis on “equivalent grade”. The reporting/ publishing of “equivalent grade” is of course banned by the Canadian Securities Law unless it is accompanied by the actual metal grade. If you were to have had a magnifying glass at hand, you would have been able to see the actual metal grade printed in microscopic font and 1 RGB code away from pure white. Simply put, pathetic
This sort of chronic dishonesty (a half truth is a lie and a truth told with the intent to deceive is also a lie) in the exploration industry is what perpetuates a negative stigma around the mining industry as a whole, but in the end, it is the junior company itself that loses the most. People, and/or companies who are looking to spend serious money tend to do rigorous due diligence. And a half baked, half honest marketing attempt leaves a bad and sceptical taste in the mouth.
Here are some take-aways:
If you are a geologist, it is best to learn this one principle early on: “Under promise and over deliver”. It will put you in good steed to be known as a trustworthy, honest professional which is probably as important as true technical expertise. Sell a project on its true merits and find the balance between being conservative but not talking a “good thing” down.
If you are a lay-investor, do not make investment decisions on junior explorers based on their websites. This is probably the part where you are going “who the hell would make financial decisions based on general information on a website?”. Well, the last time I checked 419 scams were still “booming business” out of West Africa. Go buy a bottle of good red wine, print out the technical reports, find an experienced geologist close by, let him/ her have a look and give you an opinion.
If you are an institutional investor, make an experienced geologist part of your team, permanently. Or have a couple on retainer. It doesn’t help making decisions on NPV and cash flow or whatever else when you don’t have a cooking clue what exactly the underlying asset is and, more importantly, if that asset (the mineral resource) is “real/ truthful” or the figment of a creative CEO’s imagination.
Rant over. What has your experience been of results reporting and how do you see it improving? Drop a line below or stay in the loop by subscribing top left.