EDITOR: | April 29th, 2015 | 11 Comments

Dazed and Confused in Deutschland

| April 29, 2015 | 11 Comments
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In the balmy (barmy?) days before the global financial crisis in 2008, Germany was regarded as the Promised Land for Vancouver stock promoters. They had never seen anything like it… so many sheep to be fleeced and none of them up to date on the guiles and wiles of Vancouver’s best and brightest. It was a happy hunting ground. Even better the various German exchanges went out of the way to make their lists open to all and sundry. Stocks that you couldn’t even find a ticker for in Canada, trading on some third sub-tier of Yellowknife Adventurers Exchange could get itself a listing in Berlin or Stuttgart by merely existing. This not only gave an extra ticker to fill up embarrassing white spaces, between photos of the moose pasture, on the company website but also gave one status when one strutted the floor of the Munich Gold Show touting one’s vermiculite, granola or alfafa deposit. I have met executives who still sigh for the days when their registers frequently had 40% of the holders located on the Continent.

SheepShearing

Sadly all good things had to come to the end and the severe fleecing the German sheep received at the hands of the promoters left their hides red raw and it was a long time in healing. Germany faded from view and most German-speaking investors forswore any involvement or interest in Canada besides the hockey scores at the Olympics.

Investor Information

Part of the problem for the mainstream German investor in mining stocks is the paucity of quality mining analysis and information in the language. There is clearly a space for a site such as Investorintel catering to the German market, which after all is 100 million-strong between Germany, Austria and Switzerland.

Back in the bad old days, bulletin boards in Canada were somewhat baffling to a non-English speaker with code words, jargon and nods and winks alluding to some of the less than salubrious activities of managements. For the Canadian corporates, the nasty things that Germans may have said, post-deal, on the German-language bulletin boards were unintelligible to the average geo/CEO of a TSX-V junior.

If Churchill could say that the English and the Americans were two people divided by a common language then what to make of the mutual lack of comprehension between Canadian juniors and German investors. It’s time to put both parties on the same (web)page… just in different languages..

This Time it’s Different?

Many European exchanges, despite the torpid economies, are trading at rather ritzy levels, and it should not be forgotten that the German, Austrian and Swiss economies have largely left the Euro-woes behind. They have been the gainers at Greece, Portugal and Italy’s expense. Thus there is a large pool of money swishing around looking for a “cheaper” place to reside. Despite recent travails the Euro has been doing rather well vis-à-vis the CAD or the AUD.

Such was the bad memory that most German investors had of the boom days that they stuck to buying gold coins and eschewed any paper investments like they were Weimar Republic Reichsmarks. And they were not wrong in light of subsequent performance. I went to the Munich Gold Fair in November 2012 and you could not give away shares in a Canadian gold junior, meanwhile the merchants of gold ingots and coins were doing a business like the beer bar at the Yankee Stadium at half-time on a game day.

I suspect that revival of German interest in Canadian or Australian miners will NOT be the old crowd who were burnt, having forgotten what was done to them last time. Memories in Europe are veeeeeeeeery long. More likely it is a new group of investors who are dabbling their feet in the water who don’t even know what happened to their elders the last go around.

Berlin_borse

Conclusion

Europe used to be an obligatory stop on the peregrinations of the average Canadian mining executive in those dimly remembered days pre-2008.  Since then only the hardy few bothered to traipse so far and expend so much on an air ticket to turn over the stones in Zurich or Munich to see if there were some stray francs or euros lying around uninvested. Hosting dinners in Munich and Zurich for professional platelickers (albeit sharply dressed ones) was an extravagant use of the diminishing shekels in a miner’s treasury.

It has been a long hiatus indeed with only a hardy few persisting with the effort. However, for a company like Commerce Resources, the persistence has paid off with household name recognition in German-speaking circles, while much bigger names or producers go largely unknown in the corridors of Frankfurt. It is interesting that the stock they can’t get enough of is a sometime specialty metal story and NOT a gold story. Is this indicative of a revived interest in non-precious paper? Will this eventually spread to gold and silver stocks or have they burnt their bridges one too many times with investors who got to see neither production nor dividends?

The first whispers that deals can be closed in Europe are starting to appear and if word gets around then we should see the Business Class of flights from Vancouver to Frankfurt bulging again as bust juniors go in search of funds with the old joie de vivre (well really the old “damn the expense, put it on the corporate card” attitudes of yore). However, many of these unworthies have gone the way of all things (and their corporate cards have long ago been cut up and tossed away) and the German investor today will not be so easily suckered. Certainly with better information at hand (in German) than the pump-and-dump bulletin boards of days gone by the vision opens up for a more sober and sustained evolution of the German capital markets as a place for some of the more serious miners to build a following.


Christopher Ecclestone

Editor:

Christopher Ecclestone is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten & Company in New York in 2003 ... <Read more about Christopher Ecclestone>


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Comments

  • Daniel

    Amazing superficial information without actual substance. I’ll comment on this as a resident of Vancouver and created the coin phrase “Pristine British Columbia”. Vancouver is the bridge between North America and Asia Pacific strategic to the balance of geopolitical power in the 21st century. The Germans know. The Germans French and British are coming here to do business. The city is poised to be the Financial Center for all of North and South America as Yuan Hub to replace foreign currency translation as well as a new International Maritime Center.
    The German wish they could all live here. The girl I talked with 3 months ago who moved here stated she moved to paradise.

    April 30, 2015 - 9:29 PM

  • Christopher Ecclestone

    Great place to live.. but count your fingers after shaking hands with a Vancouver mining promoter…

    May 1, 2015 - 3:06 AM

  • ben

    Commerce Resources (CCE) is indeed still THE household name in Germany. If you find someone in Germany that knows about heavy rare earths, he will give you two names: 1) Commerce Resources; 2) Tantalus.

    The general consensus in Germany is: CCE is gonna be the next big thing, Tantalus is quite alright and all the other HREE explorers like Avalon and Tasman are either totally unknown or are being considered “clown explorers” without any chance to ever be put into production.

    May 19, 2015 - 3:45 PM

  • Jack Lifton

    Chris,
    I cannot imagine conflating or conjoining Tantalus with Commerce Resources? But I take your word for it that in Frankfort the two are mentioned together.
    I find that contemporary Europeans are getting more Eurocentric with regard to critical natural resources, so I suspect that Tasman is becoming of more interest to the Germans who finance such things.
    Since Europe is the near abroad to your current domicile I think you know whereof you speak, still…
    Jack

    May 19, 2015 - 7:25 PM

  • Investor

    The biggest danger is if Germans start pouring money into ventures which have no hope. They will get burned and move out of sector or start being overconservative.
    So the advice is think not twice but three times. Investigate and do your own testwork if required or needed. Get few experts from different parts of the world before you invest.

    May 19, 2015 - 8:14 PM

  • InvestWatch

    Tracy tells me InvestorIntel.DE will be ‘live’ August 15th…

    May 20, 2015 - 9:04 AM

  • charles.1

    Germany was hit hard by a series of promoters in the mid-2000’s and without question Germans have long memories. CCE may be known in Germany due to heavy promotion, but the chance of support is very low. I think pricing bears that out – is CCE the only REE play globally to be sitting at 18-month lows?

    May 21, 2015 - 1:02 AM

  • Michael Adams

    Tantalus was set up as a huge promo after the success of CCE in the German markets a couple of years ago. Strictly promo though.

    CCE and the Zimtu team are having a really long breath and are constantly (still) promoting in the German speaking markets. They are also coming over to attend and present at various resource shows and other events for a long time – and this commitment to their German investors is rewarded.

    Too many Canadian made use of the “Stupid German Money” in 2004 – 2008 after the “initial” companies that came over to Germany (f.e. Osisko, First Majestic, Blue Pearl (–> Thompson Creek) delivered a huge success to early German investors. But on their “heels” there was an inflow of BS pump and dump companies that had no chance of ever becoming successful and as they could not fool their home market they thought of just promoting like hell into Germany and get rid of their blocks of paper. The “innocent” German retail investor – driven by greed rather than understanding the mining industries basics was scammed all the way and a bunch of really nice big houses have been build in North Van by the investment money that some Canadian players ripped off.

    Anyways, I guess the Germans learned their lesson the hard way – and while there is still a lot of interest towards Junior mining companies the general approach is way more skeptical.

    My advice to all Canadian companies and their management teams would be to
    – if you decide to go into the German market – you’ll need to have a long term commitment
    – be prepared to spend some $$$ on “marketing” – but don’t do it too aggressively
    – lower your expectations and don’t expect a huge impact of your activities (at least not right at the beginning – it all starts with creating trust…)
    – DELIVER on your promises (at least TRY …. PLEASE!!!)

    Cheers

    Michael

    May 22, 2015 - 2:33 AM

  • Christopher Ecclestone

    Bravo, Michael… well said….!

    On Tantalus, they have changed their spots and are now getting real…

    May 22, 2015 - 2:42 AM

  • charles.1

    I believe that until a real company (ie producer or near producer) invests some serious effort in Germany, the opportunity for explorers will remain very restricted. Zimtu, like CCE sits at multi-year lows – the stories aren’t mature enough to gain serious German market interest. I would love to see an Agnico or Goldcorp or First Quantum do some heavy promotion/education about how a company/project can develop.

    May 22, 2015 - 3:27 AM

  • ben

    The Germans seem to be very well-informed about CCE and daily discussions are taking place on the internet. I don’t know of any other HREE Canadian explorer, where the drilling results and plans, ownership structure (incl. buying and selling of the stock by various funds like UBS), financing plans and requirements, deep technical analysis of the stock price, PEA results, and potential PFS results are discussed back and forth almost daily.

    Once the price is “low enough” and given that the PFS for Ashram is around the corner, I would not be surprised, if some German investors are making a serious move.

    May 26, 2015 - 10:23 AM

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