IOH boss urges junior miners to be realisticNick Evans, The West...

IOH boss urges junior miners to be realistic

Nick Evans, The West AustralianMay 31, 2013, 7:29 am


Junior miners need to cut back their exploration portfolios and trim development plans to win back the support of global equity markets, according to Iron Ore Holdings' boss Alwyn Vorster.

Speaking at the WA Mining Club yesterday, Mr Vorster said there was little small resources companies could do to influence major factors in the decline of the market value at the junior end of town, such as concerns about the outlook for the global economy, or broader gloomy market sentiment.

But he said the market value of mining hopefuls could be rebuilt if companies moved to wind back their expectations, and focus on building their long-term value in fewer, higher-quality projects.

"The days that the smaller end of town can have 10 projects, or 12 projects, I believe is over," he said.

"We have to focus on our one or two best projects - not burn the cash on 10 or 12 projects. I know there are many examples of local companies still doing that, with only three or four million dollars in the bank."

Mr Vorster pointed to figures showing a drastic pullback in equity financing for mining projects since 2011, and the fact that even most established iron ore miners were trading at a substantial discount to analyst assessments of the net present value of their mines.

He said explorers seeking to develop projects had to be "more realistic" about their ambitions.

"There was a period where many small companies were talking about two or four or five billion- dollar projects," he said. "I believe those days are over, and that we need to be more realistic about what we are telling the market, and what is fundable, and what we can get involved in as junior players."

IOH announced yesterday it had won Federal environmental approval for its proposed new port at Cape Preston in the Pilbara, part of the company's 8mtpa Buckland iron ore project.

Shares in the company closed unchanged at 72¢ last night.

http://au.news.yahoo.com/thewest/business/a/-/wa/17403601/ioh-boss-urges-junior-miners-to-be-realistic/