JOHN Hancock is confident that renewed interest in Australian projects from foreign capital is a good indication the country is moving on from some bad policy decisions, as he looks for the new investment opportunities in the junior resources space.
“The Roy Hill result has been a big endorsement of Australia as an investment destination. The junior sector will benefit from that and the government’s new direction,” he told The Australian. His mother, mining billionaire Gina Rinehart, recently finalised funding for her $US10 billion ($10.72bn) Roy Hill iron ore project in Western Australia.
“I’m doing my best to attract foreign funds to Australian companies, and beyond resources. Small companies can sometimes become big companies — they just need a little help along the way.”
Mr Hancock has increased his focus on Australia’s junior resources space after recently taking on a consultancy role with Lind Partners, a New York-based alternative asset management company.
“A healthy junior space is an important part of the Australian resources sector and providing more funding options to juniors is a win-win,” he said.
Mr Hancock, who is said to be close to a settlement in the case against his mother that saw him and his sister Bianca Rinehart sue her over the $5bn family trust, says he knows just how tough conditions can be for the junior companies.
He said he shared the enthusiasm that his grandfather, Lang Hancock, and his mother had for prospecting in Australia. Mr Hancock highlighted that Hancock Prospecting was until the late 1990s a junior company facing its own funding problems, adding that without the royalty stream it received from its Rio Tinto joint venture it would not have made it through the tough years for iron ore.
Looking at new opportunities for Lind, Mr Hancock said that while it was obvious he liked iron ore, access to infrastructure was key for the bulk commodity. The other commodities on his radar include copper and platinum, as he outlined that they were both fundamental to modern lifestyles. He is also keeping an eye on nickel assets.
Lind Partners’ New York-based managing director Jeff Easton acknowledged that conditions were tough for juniors at the moment but he said it was slightly improving.
“Things will continue to improve as discoveries are made and the companies with no true prospects and less qualified management teams fall away, leaving a smaller but more attractive set of companies for investors,” he said.
Mr Easton added that the current market reminded him of the US technology sector in 2003. He outlined that after the US tech markets had crashed and bottomed, the vast majority of investors lost interest, creating a very depressed and illiquid market.
“It also created some of the best opportunities I have seen in my investing career. One was able to buy Apple at $US11 a share,” he said.
“From this perspective, investing in the Australian junior sector is far more attractive than it has been in some time.”
The head of the asset management company said Australia had been and continued to be a fantastic place to invest, adding that for Lind, Australia also served as a gateway to international investment opportunities.
“Many of our investments, while listed on the ASX, have assets in various geographic regions where we would most likely not directly invest,” he said.
“By investing in these regions through Australian listed companies we have the benefit of allocating capital to a market that is part of a stable political and economic system with expert market participants that fully understand the regions they are working in.”
Lind Partners manages the Australian Special Opportunity fund, dedicated to investments in Australian listed companies and, to a smaller degree, private ventures.
Mr Easton said when looking in the resources space he looked mainly for companies that had good projects, along with effective and passionate management teams.
“We do not try to time the markets. Rather, we seek to have broad exposure to as many commodities as possible,” he said.
“This enables our investors to benefit from our portfolio companies achieving good results as well as being able to participate in the price appreciation of any single commodity. For example, our investments in companies with a nickel focus have been outperforming as of late.”
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