Kaiser Research Online publisher John Kaiser says the pathway of funds coming into junior resource companies is being strangled
SmallCapPower | March 10, 2020: In an interview with BNN Bloomberg at PDAC 2020, Kaiser Research Online publisher John Kaiser discussed what he considers to be the dire nature of the junior resource market. He noted that the junior resource sector is in the ninth year of a bear market.
“It’s getting critical. There’s little money going into companies. Half of the 1200 Venture (exchange) listings in the resource sector have negative money (owe about $2 billion in total), while about 40% still have about $2.5 billion (total) in the treasury,” Mr. Kaiser told BNN Bloomberg.
John Kaiser contends that the pathway of funds coming into these companies is being strangled – older investors (Boomers) are investing more conservatively, while younger investors don’t understand the resource space and, in most cases, lack the accreditation needed to buy into private placements.
Glimmers of hope?
John Kaiser mentioned the introduction of the existing shareholder exemption, in which non-accredited investors can invest $15,000 per calendar year per company. He calls that a good step.
Mr. Kaiser thinks private placement financings should be broadened to include smaller, non-accredited investors. This, he said, is due in large part to the changing nature of the brokerage business, which is fee-managed and focused on larger-cap companies – “the diversity of the system is being crushed.”
John Kaiser believes the old days of the single prospector discovery is “pretty much done.” He said the bigger mining companies are either exploring for new deposits on, or near, their existing operations or are acquiring juniors that have found something from scratch.
He also pointed to a new age of technology, digital technology and 3-D visualization, in resource exploration that is appealing to a younger generation of geologists but without money those people don’t have jobs.
John Kaiser said the post-Boomer generations need to be educated on how to make money in the junior resource space; how a stock can rise 10 or even 100 fold as a result of an exploration discovery. He believes the setting is there for this to happen.
One junior John Kaiser said he’s watching is FPX Nickel Corp. (TSXV:FPX).
“This is an example of one in which you could make many times your money. It’s in the nickel space; it’s a different style of deposit … it might even be carbon neutral because of the peculiar nature of the magnesium in the tailings.”
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