Promoter Banks on Lucky Table 25 as 25,000 Look for DealsChristopher Donville
David Grondin had taken up position at his lucky table 25 in the InterContinental’s Azure restaurant, pitching his latest dream at the world’s biggest gathering of miners.
“We may be small, but we think big,” Grondin, 36, said during a break in the proceedings in Toronto. “All the world comes to PDAC and now they are coming to meet with me.”
Thousands of other entrepreneurs like Grondin, chief executive officer of TomaGold Corp., were touting their projects with similar enthusiasm at the Prospectors & Developers Association of Canada convention.
This is how promoters of mine-exploration companies try to get projects off the ground: one plausible, or sometimes implausible, sales job at a time.
That task has only gotten tougher since gold fell last year by the most in more than three decades, reducing the chances that so-called juniors would get funding from, or be bought by, larger miners. After years of expansion, gold producers were forced to cut budgets and sell mines instead of aggressively looking for smaller projects to invest in.
“When the glass is half full, every legitimate junior is deemed to be a success until proven otherwise,” John Kaiser, editor and publisher of Kaiser Research Online, said in a March 3 interview. “When the glass is half empty, every exploration play is deemed to be a failure until proven otherwise.”
At PDAC, which was attended by more than 25,000 people for a fourth straight year, Grondin is looking for investors to buy as much as C$3 million ($2.7 million) of convertible bonds so he can make mining acquisitions. At the same time, he is trying to stoke demand for shares of Montreal-based TomaGold. The first part of the plan wasn’t exactly sitting well with at least one potential investor.
Douwe van Hees, 27, an adviser to Netherlands-based money manager Plethora Precious Metals Fund, tells Grondin he only invests in companies that exclusively explore for metal.
“I don’t want to be exposed to a production story,” Van Hees tells Grondin.
To highlight the notion he can be trusted to make money, Grondin, a former financial analyst who lives in Montreal, plays up his track record at TomaGold, which has a market value of C$12 million. In November, the company said that Iamgold Corp., Canada’s sixth-largest gold producer by revenue, agreed to spend at least C$16 million on exploration drilling and make C$1.58 million in payments to earn a 50 percent stake in TomaGold properties in Quebec. TomaGold has soared 32 percent in Toronto trading since then.
With Toronto-based Iamgold drilling TomaGold’s Monster Lake property this week, Grondin feels like he’s on a roll. And he wants to keep it that way.
“Now I have good momentum -- there is a lot of interest in my company,” he said. “My way to do things is to be aggressive.”
Grondin’s week at PDAC, which ran March 2 to 5, began with a series of meetings on Sunday with a New York investor-relations firm, fund managers from London and Amsterdam, and a Vancouver financial planner.
“I want you to stay highly motivated and call your clients,” Grondin exhorts Chris Morgan, an investment adviser with Canaccord Genuity Group Inc., during a meeting at table 25.
Grondin was glad to get that particular table, which has a prominent location, because he had successful meetings with investors there at last year’s PDAC convention.
Grondin’s pace intensifies the next morning with multiple media interviews and a meeting with Kris Gram, an Oslo-based corporate finance partner with Pareto Securities, who expresses interest in the explorer’s ambitions. After more meetings in the afternoon, Grondin attends a reception hosted by Mackie Research Capital Corp. at beerbistro on King St., where he mingled with stock promoters and bankers.
“I want to open as many doors as possible,” he said.
As the PDAC conference was coming to an end, Grondin said time will tell whether his efforts in Toronto would lead to any new investments.
He acknowledges that he’s in a difficult business.
“It’s tough, it’s really tough,” he said as his business day was ending. “I work all the time.”
Others are working hard too.
The number of mining-company stock sales, one of the few options available to explorers to cover costs and advance projects, fell for the third straight year in 2013, according to data compiled by Bloomberg.
Cash piles dwindled as a result. More than 1,000 mining-industry companies with a market value less than $200 million and no revenue in the past 12 months had a median of $640,830 in cash at their last filing, about half the level two years earlier, the data show.
There have been a flurry of mining-industry share sales this year, and Grondin said he’s confident he can borrow enough money for his own projects, including transforming TomaGold into more than just an explorer.
“It’s a really good project,” Grondin is telling Terence van der Hout, a Netherlands-based researcher at Commodity Discovery Fund back at table 25. “It’s really good to have a strong horse running. I want another one.”