Wednesday, June 29, 2005 AS RESOURCES fever swept through London's City financial district over the past two years, it was intriguing watching the scurrying among London's institutions and brokerages to establish their minerals' credentials. By Paul Garvey*
Mining and energy divisions, unceremoniously culled during the lull in the resources market, have been hastily reconstituted, and long-forgotten "track records" in the sector have been dusted off and touted.
But there was certainly no need for such shenanigans at Williams de Broë – it's hard to dispute the minerals' credentials of a firm that has been specialising in mining since 1869.
Frank Moxon, Williams de Broë's corporate finance director, said such a history brought an obvious sense of stability to the firm and meant clients could be confident in the knowledge the firm was committed to the sector.
"We're not reporting to a chief executive who is wondering whether or not we should still be doing natural resources in a year's time, or who is thinking about cutting costs. We've always done natural resources, and we're always going to get the backing and support we need from the very senior levels within de Broë and our parents ING, because this is something we've always done and is something we will always want to do," he said.
That commitment to and experience in the sector has been evident in the firm's performance since January 2004. The £36.1 million raised by Williams de Broë for resource IPOs since January 2004 has appreciated by 40.85%.
The firm has also presided over the growth of several other AIM stocks, including Petra Diamonds.
"Petra was a £10-11 million company just over a year ago when we took it on. It was a story that was well known in London, I think all the brokers had for years been sidestepping them, but we took a view that (chairman) Adonis Pouroulis and his team had answered all the questions and the time was right to move on. Now it's the biggest diamond company on AIM from pretty much last in the pack a year ago," Moxon said.
"It's great to have achieved that, but the focus is to make sure what we've done is stabilised and solid."
Moxon said it was important to keep a broad front when it came to assessing individual companies.
"The market itself is a fairly fickle mistress. If you set your heart on only doing gold mining, because that's what the market likes, then that's fine, but the market will switch to diamonds or platinum when you're in the middle of it," he said.
"In terms of the rules and all the standard yardsticks you have, there's always an exception to the rule, or there's always something that might infringe your rules but its better for other reasons. You've got to keep an open mind.
"We've deliberately not piled into a particular mineral simply because its hot right now. I think its important to have that spread as part of our reputation is going to rest upon our success, and in order to have success you're going to need a portfolio approach. You've got to look around for variety."
He said that while the market was in a quiet patch, investment interest in the sector was far from over – despite press efforts undermining the sector's strong run.
"The UK press has been trying to create a dot.com bubble out of the mining boom for some time. I think if you publish enough notices that doom is coming, at some point or other you'll either be right (because your predictions were correct), or you'll be right because you've upset the market yourself by knocking people's confidence."
He said some investors had been shaken by the events at Regal Petroleum – "to be fair to Regal, we were picking up signs that there was fatigue in the market for a week or two before that announcement" – but the current cooling in interest was just a pause.
"This is a pause for reflection, a bit of breathing space if you like," Moxon said.
"The second half of the year will see an increase in activity and the bull market will carry on. The question is going to be whether it's a hesitant restart or if it comes on at full throttle."
While Williams de Broë's established reputation gave it a head start over rival firms scrambling to establish their resources' credentials, Williams de Broë itself was far from idle. Rather than let its 136-year history speak for itself, Williams de Broë decided to add to its team through the recruitment of Kevin Tomlinson.
Tomlinson, a Canadian-born geologist, became well known to observers of the Australian resources scene for his work as head of research at Perth-based finance house Hartleys.
"Our intention is to create a team which majors well in all three areas – corporate finance, research and sales – and to use that team to become the leading player in small- and mid-cap companies," Moxon said.
One of Tomlinson's key roles will be overseeing the development of the firm's research department.
"Kevin is quite keen to get out a broad-based research product which will lead us to be seen as a research house as much as a house that does corporate finance deals," Moxon said.
"Kevin's actually by training a geologist, he's actually worked in the industry and been a CEO of a mining company, which is something not a lot of people have done. He's someone who's been there, seen it and done it, rather than someone who simply knows the theory or rules and regulations."
Tomlinson said he had been attracted to Williams de Broë by its "long-standing reputation for supporting junior companies in the natural resource sector".
"In the short time I have been with them, the team has been restructured, augmented and repositioned for the next phase of the natural resources bull market. We are already taking advantage of the temporary lull in the market to put in place the resource and systems needed to raise our game in terms of size and quality of clients and in funding capacity," Tomlinson said.
"This will not necessarily move us away from the smaller end of the market but it will involve us providing the market with more informed choices in terms of deals and a more authoritative, global industry context within which we present them.
"We want our client list to represent the quality crop of both the acorns and the oak trees."
Like Moxon, Tomlinson sees mining's strong run continuing.
"The China story is just not going away, it's extremely strong, and everybody who comes back from China says how they can't believe how much is going on there. They're not making it up; that's the reality."
*This article was part of a feature on London's AIM in the June editon of RESOURCESTOCKS magazine
Click here to read the rest of today's news stories.
