When we analyze our data, one of the most striking sectors is small cap gold. You would think that gold has lifted all boats, but for pure exploration companies doing early stage grassroots prospecting, gold is a horrible bedfellow.
There is a limited number of dollars that can be used to fund early stage exploration. Currently there are at least 600 small cap gold companies each chasing enough money to sink a few holes and hopefully find the next big thing.
The problem is each company cannot raise enough to efficiently explore, let alone properly drill targets. The number of small cap gold companies in Canada is like having seven Chevy dealerships in a small town. There is so much competition that they have driven up the cost of raising money and driven down the quality of exploration.
We recommend merging teams, resources, and building small-cap gold tribes. It is already being done to some degree, but we would go one step further. Someone should open an office in Vancouver with a focus on gold companies and with shared accounting, IR, and other back office resources. Company CEOs would market together and jointly solicit investors.
Egos and fear might prevent tribes from forming; fear of a competitor stealing your idea or project, or fear that the company next door strikes it rich and you don’t. However, small cap gold is one market where the traditional group model of multiple companies, multiple commodities, and multiple focuses wastes money. It would be more efficient to find some way of assigning regional focus to different companies and sharing resources.