Who we are
Experienced equities analysts specialising in producing detailed and thorough research reports
Headquarters
Sydney, New South Wales
Strategy
To offer accessible and informativeresearch to both professional and lay investors, helping them make informed investment decisions.
Distribution
Over 60,000 high-net-worth investors and Self-Managed Super Funds
Target markets
ASX-listed small cap resources
In the fast-paced world of financial markets, access to timely and well-researched insights can be a game-changer. However, while the quality of financial research is crucial, one element often flies under the radar – distribution.
Specifically, the networks that deliver research to the right audience can have a transformative impact on small cap companies, often turning obscure entities into market movers.
Junior gold explorer Brightstar Resources (ASX:BTR) is a prime example of how research distributed to the right audience can drive an increase in investor interest.
After East Coast Research (ECR) released a report for the company on 20 June 2024, there was an immediate impact on the same day the report was released.
Trading volumes increased by 829%, from the 30-day average of 7.3 million to 67.7 million shares, value spiked by 901%, from the 30-day average of $120,195 to $1.2 million,
while the number of trades jumped by 661%, from 36 to 276 trades.
Ricky Singh, Managing Director at East Coast Research, tells Mining.com.au “these numbers are unheard of in the market”.
East Coast Research has a distribution network of around 60,000 high net worth investors and self managed super funds.
The company predominantly covers small cap resources companies and has completed research in the past for copper explorer QMines (ASX:QML), gold miner Horizon Minerals (ASX:HRZ) and gold explorer Magnetic Resources (ASX:MAU), to name just a few.
East Coast Research released a report on QMines on 4 September 2024 and since then the explorer has risen to a new 52-week high of $0.11 at the start of October – a 67% increase in less than a month.
While the stock has come back slightly, it is still nearly 35% ahead of where it was prior to the release of the research.
Horizon Minerals also reached a new 52-week high with a 28% rally to $0.059 following an August 2024 report.
Brightstar Resources Managing Director Alex Rovira says East Coast Research has had a strong impact for the company in terms of market engagement and awareness of its growing Western Australian gold operations.
“Asanemergingproducerwithanumberofhigh-impactworkstreams ongoing, ECR played an important role in distilling the project information and illustrating the value proposition into a coherent, readily-digestible research note that assisted Brightstar engage with new and existing shareholders and investors,” he tells Mining.com.au
When financial analysts cover small cap companies, their reports aim to spotlight untapped opportunities. However, no matter how insightful the analysis is, its impact can remain limited if it doesn’t reach the right people. This is where distribution becomes a critical factor.
Singh says it is not just about generating great research, it is also necessary to get that research in front of investors who have the means and mindset to act on those insights.
“You might have strong fundamentals, excellent growth prospects, and a great story. But without the right audience, the market doesn’t hear it,” he explains.
“Historically, companies have engaged with research houses that lacked the distribution network to ensure their story reached the right people. Great research with no audience results in no impact.”
Along with its large network of high-net-worth investors, East Coast Research has a select group of sophisticated investors (708s) who regularly participate in capital raises and continue supporting companies as shareholders.
Singh says this provides a “great opportunity to leverage their backing”. Another lever the company has to drive investors towards undervalued small cap miners is through its CEO or senior management interviews.
Singh says these interviews allow a CEO or senior management to explain the business in its own words and build a personal connection with investors.
“For instance, we recently conducted an interview for a company that resulted in the addition of 250 new shareholders to their registry,” he says, “Apartfromreportsandinterviews,wealsohostexclusiveminingseminars where we present directly to high net worth investors. For example, we recently hosted a seminar that invited 150 investors to explore opportunities in the resource sector.”
Small cap companies typically face numerous challenges in attracting investment. Many lack the marketing budgets or investor relations resources to make themselves known to broader audiences.
Furthermore, larger institutional investors often shy away from these companies due to concerns over liquidity and volatility. As a result, these smaller firms can remain undervalued and overlooked for extended periods, regardless of their growth potential.
Singh says he sees a lot of “verytightlyheld”companies, which limits trading activity.
“So what these companies ideally want from us
is to open the pool of investors for them, and bring in a fresh set of investors,” he says.
“Our investors are all across Australia, not just Perth. You get new investors from the East Coast of the country, and once you have a larger pool of investors, it gives you more to play with.
“So your trading volume goes up, it attracts new investorstothestockbecausetheycanbuyinandthey can get out. There’s enough buying and selling.”
By targeting high net worth investors – who typically have a higher risk tolerance, longer time horizons, and a deep interest in growth opportunities – distribution networks can help elevate a small cap company’s profile, increase liquidity, and drive valuation.
Interestingly, in June 2023, East Coast Research released a report on Alto Metals (ASX:AME) saying the gold explorer would continue to be an attractive acquisition target following several previous unsuccessful takeovers.
By August 2024, Alto had agreed to a merger with Brightstar Resources that is due to be completed around mid-November this year.
“We like to work with companies that we believe are undervalued,” Singh explains. “There’s definitely value in some of the juniors. We’ve done six reports on gold stocks in the last six months.
“We also see a lot of M&A being played out.”
East Coast Research says in its July 2024 report on gold explorer Magnetic Resources that it believes the junior is a definite M&A play.
“We have actually said that clearly we believe they will be bought out at some point,” Singh notes.
Gold, in particular, has been one of the “more intense sectors” in terms of recent M&A activity.
That is probably unsurprising given the multiple records gold keeps hitting, but the seeming lack of interest from investors in the small cap stocks, which makes them extremely attractive targets.
If Magnetic were to receive a takeover approach, East Coast Research expects it will be at a 30% to 50% premium.
“The gold prices have gone higher, but the gold stocks have been stagnant.
That’s why we don’t just deliver high-quality, institutional-grade research – we back it with action.
So there’s this disparity there which we think at some point will catch up,” Singh says.
Another way East Coast Research assists on the M&A front is by getting news of strategic acquisitions in front of investors.
After White Cliff Minerals (ASX:WCN) secured two new projects prospective for copper, uranium, gold, and silver in northwestern Canada, the junior enlisted the help of East Coast Research to get the story out.
A report was released in June 2024 and since then White Cliff’s share price has jumped nearly 53% from $0.019 to a new 52-week high of $0.029 in early October.
The company also recently attracted a $2.5 million cornerstone investment from its strategic advisor, John Hancock, as part of a total $5 million placement done at a premium to new and existing sophisticated and professional investors.
More often than not, capital raisings completed by junior explorers are done at a discount to their share prices, not a premium.
Ultimately, he says, it comes down to delivering “tangible results”.
“We understand the pressures in today’s market, especially for junior companies. Budgets are tight,? and every dollar you spend needs to yield tangible results,” he says.
“That’s why we don’t just deliver high-quality, institutional-grade research – we back it with action.” ■
Written by Angela East for Mining.com.au
