When The Going Gets Tough…The Tough Get Digging

“In 2013 we are facing tough times again,” said Wilson Robb, Chairman of Aurum. But gold is at $1300 an ounce – not all that long ago, such a price would have been regarded as very high. What has happened to change perceptions?

Mineral exploration is a cyclical activity, funded by the stock markets; a lack of market confidence has several knock-on effects. The main one in the resource sector is that junior companies are unable to get to money to keep themselves clearly and visibly active, they cannot explore, leading to no results and so they run the risk of completely losing an already shaky investor confidence and off we go again – it’s a vicious circle.

“People only tend to see the short term – that the price has fallen from highs of over $1600,” said Robb.

“When things get difficult, the company bean-counters generally look to batten down the hatches…tight.  They follow the crowd, retrench and cut their exploration costs down to zero, or as close to it as they can get away with.

“The reality is that they need to be imaginative and creative and get out and work their projects but they cannot afford to maintain all the staff and resources that they actually need to progress things and stay in the investment shop window. That is where we come in.”

The one-stop shop

Robb maintains the Aurum low-cost, on-off contract service model is exactly what companies need in tough times. It has, at their clients disposal, a complete complement of qualified and experienced geological and technical support staff under one roof; covering all manner of management and field exploration activities including: geochemical and geophysical sampling; geological mapping; logging; drill management and core sampling. It remains fully equipped for all field- and office-based geological surveying, sampling and data acquisition and manipulation. It stands ready to develop or assess client-specific exploration portfolios and conceptual precious and base-metal exploration targets across the world, using a combination of its own existing and client or government databases.

“We can help with the generation of ideas and with making funding contacts,” added Robb.

“We help people to identify targets and to get work done, in an affordable way. We have the staff needed here, which means that our clients do not have to go through the process and incur the expense of locating, sourcing and hiring personnel, and paying the on-going overheads involved.”

In times like these why bother?

Outside observers raise a question that is to them, obvious. Why not just put the shutters up when things get difficult? Why is it important to keep turning over activity, rather than wait for things to improve, as most businesses would?

“These companies need to keep the news about their activities flowing,” Robb said.

“Positive results and advancing a project is important in supporting their share prices and this is in turn tied into maintaining access to funding. They need to be seen to be active, confident and showing success.

“Rather than throwing the baby out with the bathwater we suggest that we can provide a cost-effective means to help them through the bad patches.”

The reality is that tough times lead to shake-outs and some companies will go to the wall.  Robb believes those that are in a position to get into market action quickly when things pick up will be the ones to prosper – and in exploration, things can pick up very quickly and with little or no notice, sometimes only for short periods.

Right place, right time – ready for action

“There are lots of projects around and they are not all good projects, but unfortunately all projects appear to be getting treated the same – sorry, no funding available,” said Robb.

“The people with a good project and in possession of a combination of vision, access to money-men and the correct skill sets will be able to take advantage to get the work done and move forward with the market upswing.”

He believes there is no doubt that things will improve, the world population is 7 billion and it’s not getting any smaller.

“People still want stuff, from cars to cellphones, and things generally need metals to make them,” added Robb.

“The current correction in metal prices is inevitable after what was a 10-year boom and it’s true that some chickens are coming home to roost – a lot of money has gone into a lot of companies and many have not delivered – but this is not some market disaster; generally, things are actually quite buoyant.”

One commentator has pointed out that metal prices now seem to have stabilised at levels that are significantly higher than where they started, and, of course, non-exploration business generally has remained reasonably resilient.

Keep on keeping on

“This is going to be survival of the fittest and smartest – there are some sources saying they will not fund exploration companies till the shake out is complete. But if you have a project you believe in then you should work on it, keep the news flowing and produce results,” said Robb.

“If you are not doing anything for six months or a year, you will not have anything to say to be looked upon favourably by the smart opportunistic money, let alone the general risk money when it’s turned on again – it’s the squeaky wheel that gets oiled.”

If anything, the indication is that investors are taking a more hard-headed (some would say, realistic) approach. They are looking for profit and loss, free cash flow, ability to operate – in short, despite the potential for upsides in the several-thousand percentage point levels, they want a clearer idea that their investment is going to be repaid.

They want more than a wing and a promise: they want solid evidence, of progress, of realistic expectations and of effective operations and management.

“That is where our value for money, contract exploration service model can help – we provide the resources the exploration companies need, quickly and for only as long as they are needed,” said Robb.

“We help to keep that essential news feed flowing, that vital visibility maintained and – most important – the project moving forwards to give returns to the client.”

NOTES TO EDITOR:

Aurum Exploration Services operates globally from offices in Ireland and Canada. It undertakes and completes contracts in locations and environments ranging from the Arctic climates of Canada, Greenland and Sweden, through the deserts of Saudi Arabia, Mauritania and Sudan, and on to the tropics of Ghana, Nigeria and Thailand.

Aurum has proven expertise in a wide variety of geological settings and deposit types. The company has the experience, expertise and personnel to provide you with a full spectrum of exploration services for your precious metal, base-metal, ferrous metal, energy mineral, industrial mineral and rare earth element project.

Our management and technical team are comprised of thirty industry professionals, including experienced project managers, geologists, technicians and support staff. Together, they offer clients a complete suite of exploration services; from desktop studies and target generation through project management and field surveys, to resource estimation.  Aurum deploys cross-disciplinary collaboration, team thinking and cooperative action to produce evidence-based interpretations and recommendations for exploration projects.

For further information or imagery please contact Andrea Clarke on [email protected] or +442890455911.