Mining Promoter's Handbook
The art of promoting mining projects has a long and undistinguished history. It started with Jason and the argonauts (the fleece was placed in a sluice to trap small particles of gold in streams) carried on by Cecil Rhodes and probably reached its peak with Bre –X in Indonesia. To help Fools navigate their way through this minefield (gettit) we thought a little guide might be appropriate.
So here is the Official Motley Fool Guide to Promoting Mining Stocks. It can of course be quickly converted to promoting technology or biotech shares by deleting all geological references and replacing them with various technical words from the electronics or genomics industries.
Rule No 1
Make frequent press releases. The stock will move on what is called “news flow”. Any time someone flies out to the exploration area, or peers down a microscope, tell the world. This is because every shareholder knows in their bones that they shouldn't really be holding this stock. However, constant reassurances by a portly Chairman are known to deter investors from selling.
Rule No 2
When presenting on TV or to a massed group always take a large piece of rock or drill core and wave it around imperiously. Tell the audience that it is a very rare piece of vermiculated pyroxene gabbro. Don't let anyone touch it and never explain where it came from. Let them make the assumption that as you are holding the rock and you are talking about the company that the two are connected. The fact that it came from your garden is not relevant here.
Rule No 3
Announce loudly that you are exploring/drilling/flying over immediately adjacent to a property where a large and more famous company is working. The geology may be totally different but few mug punters know the difference between geology and geography and this technique can work surprisingly well in giving your property an undeserved aura of credibility.
Rule No 4
Make grand claims about how much gold, platinum, copper etc was produced in historical times by the Romans, Greeks, Egyptians, Incas, Chinese and so on. Make it clear that those bozos could never have got it all out and there is still plenty left for everyone.
Rule No 5
Always include lots of pretty coloured geological maps in the annual report and presentations. For maximum effect draw lots of big bold lines and circles on them and call them trends. This impresses the hell out of people. Big maps in TV studios, or on small tables, are particularly effective as it implies the project is so large that it can't fit on a small map. Hopefully, no one will ask why you didn't bring a 1:500,000 scale map and not a 1:5,000 scale.
Rule No 6
Photographs in the annual report of gold antiquities from the local museum add a totally spurious, but very persuasive layer of intellectual credibility to the project.
Rule No 7
Always show photographs of planes and helicopters in the annual report. I don't know why, but everyone does.
Rule No 8
Never show a photograph of a donkey in the annual report. This has associations with crooks form the American Wild West which is far too close to the truth.
Rule No 9
Always show photographs of happy smiling natives. This gives the project a patina of benevolent third world development even if it is only the local mayor who will get rich.
Rule No 10
Make all press releases highly technical with lots of long words and talk of drill hole numbers, intersections, grades and rock types. Do not include anything useful that could be used by anyone to make a proper analysis of the data
Rule No 11
Keep press releases firmly dedicated to technical issues. Never talk about detailed finances.
Rule No 12
When talking about financial projections always talk about the project as a whole. Don't remind investors that their company only owns 15% of it.
Rule No 13
Financial projections are based on the most optimistic metal prices you can find. But always label them “conservative”
Rule No 14
All projections should be based on 100% extraction of the ore, and no losses of metal in the mill, smelter, refinery or your trouser pocket.
Rule No 15
Remind investors that you are using the latest computer technology. They will assume that everyone else is using slide rules and haven't discovered PC based 3D modelling yet.
Rule No 16
A good trick is to suggest that you have some technology up your sleeve that no one else has. The most plausible ones promise better recoveries or the ability to find metal that no one else can. The name of the technology should include some or all of these words: pyro, hydro, metallic, orthogonal, bio, techno, leach, molecular, sulphidic, oxide and bacterial. The word order is not important.
Rule No 17
The board should include a couple of university lecturers or, even better, a Professor. They will be delighted to fly business class and have people listen to them while they talk about archean orogenies. The presence of academics is proven to increase the fund raising power of these companies by several times. Because academic pay is so low the non-exec compensation can be kept at a modest level.
Rule No 18
On no account actually find anything or even worse, go into production. That removes all the upside potential of the company at a stroke.
Rule No 19
Never forget that of the object of the company is to raise money for the benefit of the directors. It is not the aim of the company to find anything. That makes life far too complicated and the management might have to manage something.
Rule No 20
Always find some newspaper pundit or internet tipster to back your cause to the hilt. This can be done by flying them out business class to the drill site, putting them up in a five star hotel, showing them a few rocks, and giving them a few free shares.