There's definitely a buzz in the market
Over the course of the year, we have noticed a definite shift in market sentiment towards the junior and mid-sized resources sector. Cannings Purple’s Investor Insight team explain.
Over the course of the year, we have noticed a definite shift in market sentiment towards the junior and mid-sized resources sector.
The mood shift, which is long overdue, was noticeable in early February when we attended the Mining Indaba and 121 conferences in Cape Town. While the confidence in Cape Town was effusing from the London brokers and fund managers, it didn't take long for it to be picked up back in Australia.
Companies have been dusting off capital raising plans, everyone seems to have a lithium prospect and drilling results are starting to flow again.
Resources conferences, often seen as discretionary expenses during lean times, are seeing a resurgence in demand. Competition for booths and presenter slots has shifted from organisers begging and discounting through to conference sell outs well in advance.
However, we are also seeing notes of cautiousness in the midst of this new hope. Companies have abandoned previous strategies of raising funds for the next drill program on the basis that the next raise in 6 months time will be at a high price.
The raisings that are being completed are generally larger and designed to last a lot longer. It is not uncommon for explorers to raise $5-7m on the basis that these funds will be sufficient to keep drills turning as well as the lights on for at least the next two years.
We remain hopeful that this renewed confidence in the resources sector will lead to increased share prices, quality projects emerging and further opportunities for investors.