Resource World Magazine

O C T O B E R / N O V E M B E R 2 0 1 8 www.resourceworld.com 25 INVESTMENT It has now been over 11 years since the TSX Venture Index (VIJX), an index heavily weighted with junior resource issuers, hit its all- time high. Since that time, much has changed. After a short-lived recovery in the wake of the financial crisis, the exchange hit an all-time low in 2016. Today, the index is still down approximately 78% since reaching those highs in May of 2007. There are many reasons why the performance of junior resource stocks has lagged returns made in other sectors. First and fore - most is the age demographic of those occupying the market place. The aging baby boom generation, that has long been an impor- tant source of financing and participation within this asset class, is now on average, 61 years of age. The appetite for risk amongst this generation is fading. As Baby Boomers enter or approach retirement, they are increasingly more interested in preserving the wealth they have rather than speculating to increase wealth. Over the years, the junior resource sector has provided early speculators with some life changing wealth creation events; how - ever, junior resource speculation has and always will be a risky endeavour. To service this major and aging portion of the population most Canadian financial advisory firms are now focusing on a "wealth management approach", versus a traditional, transac - tional sales-based approach. As a result, there is less professional advice available for people interested in speculating on early stage resource opportunities. For the Canadian resource sector to flourish, a new group of investors must emerge. The so-called millennial generation rep - resents a population that was born between 1981 and 1996. Financial consultant Deloitte estimates that this generation will control $24 trillion of wealth by the year 2020. Millennials were just starting to enter the work force 10 years ago during the finan- cial crisis but are now considered the largest generation in the Canadian work force. A survey conducted in 2015 for CIBC, found that 67% of millennials are invested in stocks, mutual funds and GICs, but 80% of this age group claimed to lack education to make their own investment decisions. So, in Canada, there are now fewer and fewer professionals actively selling investments in junior resources, while a major portion of the population with dispos - able income feel they lack the knowledge to make informed investment decisions on their own. This is where an opportunity exists for venture companies including junior resource issuers to actively reach out to this new generation of investors. This generation is more likely to gain knowledge and information through online and social media plat - forms than through traditional investment advisor relationships. In days gone by, investor relations activities were centred around making professionals aware of opportunities. If suc- cessful at convincing the investment professionals of the merits surrounding a particular investment, the professional would than relay that information to their client base. It is now important to try and reach the end investor directly. This is not just true of millennial investors, but of all inves - tors that are conducting their own research and making their own investment decisions. Look at it from this perspective: venture stocks are not bought but sold. If nobody has a vested interest in making people aware of the opportunity, the opportunity is far less likely to be presented. When trying to provide investor awareness to millennials, it is important to remember that they are likely also conducting their own research. This generation entered the work force during the financial crisis and have likely never had the opportunity to wit - ness some of the great returns this sector has provided in the past. Creating content that is educational as well as informative will ultimately generate the best response. It isn't enough to just release results – comments on their sig- nificance are also important. Since this generation has so much information at their disposal it is important to be straight to the point and concise, but to also provide links for additional follow up research. It is possible to reach a targeted audience by investing a portion of an investor relations budget towards content creation and care - ful social media purchases. With targeting capabilities currently available from most social media platforms, it is possible to target Attracting millennial investors to junior resource investing by Derek Wood continued on page 69 Drawing by Jay Moysey

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