Junior mining companies should start using social media pre-IPO

Oct. 24, 2012 - PRLog -- LONDON,  Oct 24, 2012 – Mining companies planning an IPO should engage in robust social media campaigns to raise visibility with investors long before coming to the stock market, according to a report published today by UK specialist metals information provider Meal Pages.

Initiating a social media campaign before listing gives junior mining companies and other small caps the possibility of raising their profile early on in the fund raising cycle, which is likely to later include rights issues and private placements once listed, argues the report entitled: Junior Mining Companies Should Use Social Media Early in the Fund Raising Cycle.

“All too often companies wait until they're listed before engaging in investor relations-focussed social media activities,” says Metal Pages spokesman, Justin Pugsley. “That seems like a wasted opportunity. The sooner they start, the sooner they can become known to potential investors.”

Increasingly, investors along with intermediaries such as stock brokers are gravitating towards social media with platforms such as Twitter and Facebook proving to be particularly popular. Investors, especially on the retail side, are turning to social media to share ideas and to monitor their investments. “It's a case of following the money,” says Pugsley.

This shift towards greater use of social media by investors is a huge opportunity for small cap companies to reach those audiences. Traditionally, they relied upon publications or broker reports to raise their profile. Though these channels will remain important the rise of social media gives junior mining companies a highly cost effective means of reaching and interacting directly with target investors.

A quarter of a century ago the economist Robert C Merton expounded on the logic of companies  spending on advertising and public relations to reach target investors on the basis that an increase in the relative size of a firm's investor base will reduce its cost of capital. That observation is just as relevant today and thanks to social media this objective can be achieved in a more cost effective way than ever before.

About Metal Pages: A UK-based provider of prices, news and analysis on rare earths, minor metals and ferro-alloys. Prices published by Metal Pages are used as industry benchmarks for contracts.