Senior Partner, Bobby Morse, identifies the impact of site visits on clients’ share prices.
Following discussions with new and existing clients and contacts made at the last Mining Indaba, the annual conference in Cape Town held every February, this year’s event was probably the most downbeat for the last 10 years due to the continued slump in commodity prices.
What really surprised me was the distinct lack of site visits which are traditionally arranged around the time of the conference. Site visits are an important part of capital markets communications – when it comes to assessing the prospects of a mining company, no amount of desktop research can replace the experience of visiting an operation in person. By kicking the tyres of an asset, analysts and investors are able to assess in much more detail the mine plans, the processing, and the quality of the operational management teams, as well as be able to swap views with some of their peers on the site visit itself. Above all, site visits can show how much emphasis the business has on safety, labour relations and, crucially, to taste the flavour of the corporate culture.
Though site visits are labour and time intensive, and in some cases more expensive the more remote the asset is, this is more than compensated for by attendees attaining a far better and deeper understanding not only of the mine (or mines) in question, but also the prospects for the company as a whole. Buchanan organised two of the few site visits to take place during Indaba – one to Centamin’s Sukari mine in the Eastern Desert in Egypt, the other to Petra Diamond’s Cullinan diamond mine in South Africa. It is no coincidence, despite the ongoing challenges of the mining sector, that Centamin’s and Petra’s share prices have risen by 49% and 47% respectively, in less than 10 weeks. So seeing is believing after all.
For more information please contact Bobby Morse, Senior Partner
020 7466 5000