An introduction to Cycles
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Transcript
Another thing to consider is the market cycle. Cycles should tie in with the commodity. It's not just the price of the underlying commodity, but it is also about what can get funded and how that can affect the life of a junior or mid-tier company.
Anybody who experienced the downturn from 2011 to 2017 knows that even though the price of the commodity was actually doing okay, particularly from 2016 onwards, there can actually be a real shortage of capital available from investment in the exploration or the development space.
That can have a massive impact on the valuation of your company. Therefore, the availability of capital is absolutely crucial. It can switch on and off. I'll go through some worked examples of how access to capital has provided an opportunity for some companies and how it crushed others, and how having alternative financing available to you can really help. It also will focus on the strength of cash flow and how companies that can maintain their bottom line and their cash reserves can prosper in a capital-constrained market.
In a sense, everything I've spoken about so far is a general approach to the company. These features are common to all companies at that stage of the cycle or in that particular stage of development, whether it's an explorer, a developer or a producer, but the next few topics will be more focused on the local or site-specific factors.
