Annual report time

HAS going electronic killed the mining company annual report, leaving it nothing but a dry and dusty recitation of holes drilled and accounts paid? The Outcrop by Robin Bromby*.
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Staff Reporter

A long time ago in a galaxy far, far away — well, to borrow the opening of Star Wars, that’s what it seems like to this 51-year veteran of reporting.

I am talking about the annual report season.

Well, “season” is probably making it more important than it seems. But it was once a season.

There was a time when financial reporters hung on the arrival of annual reports – usually, there was a story to be found, some point made by the chairman or managing director about the state of the business, the industry or the general business climate.

This may still happen in the industrial stocks — but a quick check hasn’t found any such examples – the top 50 just got glossier, with better graphics and even greater minutiae of the company’s activities.

But things are woeful in the junior mining sector.

It seems the majority of companies just go through the motions.

If there’s a chairman’s note, it is nothing more than a digest of the main announcements and soothing noises about progress made.

The bulk of the report is normally a condensed account of drilling and/or production and then all the financial notes.

Move along, nothing to see here. Or report about. Which is the point.

Now, many of the juniors spend money on public relations people but then give them little to work with.

Anyone at the reporting end of this business knows the dread of opening up the emails from resource companies.

You have to read a lot of words, most of which will never make a news or column item. Ditto with annual reports.

Yet something worthwhile can be done.

For example, I wrote an item for a Canadian technology metals website based on comments made in the annual report of Archer Exploration by MD Gerard Anderson.

He took time to pen some comments about what was happening in China’s graphite sector.

China is the largest producer of graphite and Anderson explains to his shareholders (thus to underline the importance of companies such as Archer in proving up new, non-China sources of the mineral) that Chinese graphite is declining in quality as easily mined surface oxide deposits are depleted.

Costs are also under considerable pressure from tightening labour laws and environmental standards — on the latter (as well as economic reality) count, some 200 mines in Hunan province have been closed.

Hats off to Alan Eggers at Manhattan Corporation. Sure, he is a uranium true believer (as shown by his time at Summit Resources with the resulting uranium resources in Queensland).

In Manhattan’s annual report, he gives a detailed rundown of the problems with the uranium price (off 50% since Fukushima).

But then he adds a comprehensive analysis of the uranium (and nuclear power) outlook.

He repeats — and it needs repeating because at some stage investors are going to wake up one morning and find there’s a uranium supply (or non-supply) emergency — that, notwithstanding the closures in Japan and the Germans going weak-kneed about nuclear power, there are still 432 reactors in operation around the world with another 68 under construction.

Twenty-eight are being built in China, 10 in Russia, seven in India, five in South Korea, three each in the US and Japan, two each in Slovakia, the United Arab Emirates and Pakistan, with several other countries (France, Argentina, Brazil and Finland included) building one.

As Eggers argues, soaring coal and LNG imports into Japan and Germany have increased their energy costs and emissions by significant degrees, while the much-vaunted renewable sector has not delivered.

So here’s the point: would it have been that much of a task for someone at all those hundreds of other resource companies to stir their stumps and do something more than the basic requirements of annual reports?

Yes, you do have to record the highlights of the year for the company but we know that companies do (or should do) a great deal of research into the dynamics of their intended markets.

But how often do the companies give their shareholders a perspective on gold, tin, zinc, manganese, iron ore, copper, etcetera?

Would it be that big an ask to suggest that this could be done when the 2014 report is in preparation?

You never know, someone might actually read the report.

*First published in on Thursday.

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