Why the Consolidation of Media Is Bad for Junior Mining Stocks
Twenty years ago, regional papers were writing meaningful regional mining business stories. I could expect to see significantly different localized content in Calgary vs. Toronto. Today, when you look at the top mining journalists, they are all chasing the same big cap stories.
There is lots of noise and other stuff in the blogosphere to make up for that, but none of that has the independence of traditional media. (There is no independent research either; unless a company wants the research published, there is nothing published.)
As I was watching Baja Mining blow up, I was expecting to see expose after expose about the company and the stories around it. I wanted to see all the gory details, and the press just dropped the story. They were too busy focusing on other topics more relevant to the major mining companies. Investors only lost $300m in Baja, so who cares? It is about the same as if Newmont had a 2-3% drop in market cap.
The Baffinland takeover was news because Lakshmi Mittal was involved, but if he wasn’t there would have been no press, no independent questions....
Now, as an investor, this is good in some ways: if you find a good story and company it could clearly be misvalued because the major press and news channels are not devoting any resources to junior coverage. But on the other hand, management has no political downside like they did in the past (or like they would have in Australia or the UK). Blow up a company, don’t worry about it, take a sailing trip around the world, find someone to blame, and you can get back to work three months later.
I am not sure that this is going to change. Unless you can get significant press coverage of the junior market, management has a revolving door and a free pass.
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