Speaking at the 2005 South Australian Resources and Energy Investment Conference, director of local stockbroking outfit Taylor Collison, Michael Whiting said even brown fields discoveries were few and far between.
“It appears as if the easy discoveries are no more, and looking down beneath the surface some 50-100m is where exploration will be at,” he predicted. “This, I might add, is very, very expensive and very, very risky.”
He suggested explorers may have to turn to less explored countries to have mineral success.
Investors should look to companies that are already in production or have an advanced exploration play, he said, adding that these were few and far between.
Whiting also lambasted the glut of recent exploration floats on the ASX, saying 40 companies had floated this year with 65% now under water.
“The vendor consideration has been too high, the ground is mainly moose pasture cobbled together at the last minute to pad out a prospectus and the amount of money spent on lawyers, accountants, consultants and stockbrokers is ludicrously high,” he said
“The market is not stupid – albeit it does seem to take some time to come to its senses and this is reflected in the number of new floats coming on at a discount to their issue price.”
He warned investors to not get caught up in the hype surrounding the resource boom and instead consider the management driving the company.
