A game of two halves

August 2020

It’s been another contradictory week in the life of Australian business with completely contrasting results and outlooks depending on which industry or sector you sit in.

Thanks, but no thanks, to COVID, East Coast business momentum has dimmed on the back of Victoria’s woes, while the West Coast remains largely buoyant within its invisible bubble.

It recalls a great old rugby acronym that I am sure originated from the dislocated mouth of a delirious New Zealand rugby captain when he said: “It was a game of two halves.”

With a foot in Sydney, and another in Perth, we are acutely aware of the contrast and conflict between the coasts and particularly within certain sectors.

The resources sector, where we spend a lot of our time, is a perfect example of the opposites at play, with large oil and gas companies impairing assets and projects long considered “golden calves” while iron-ore and gold miners make a proverbial killing.

The oil and gas sector is looking particularly haggard.

In the past fortnight alone, some of the bigger ticket impairments (the polite way of saying, devalued or written-off), have been announced by:

• Woodside Petroleum: $US5 billion (on all its Western Australian oil and gas assets, liquefied natural gas (LNG) plants and exploration licences)

• Santos: A$1.13 billion (a substantial proportion related to the Queensland GLNG Project)

• Total: A$1.1 billion (a shareholder in Inpex’ Ichthys LNG project in Darwin and Santos’ GLNG project in Queensland)

Meanwhile, many of the small caps (companies with market capitalisation under A$1 billion) and private equity businesses appear to be barrelling ahead.

This especially true of companies like Vysarn, a hydrogeological drilling company, which we profile this week. The Company’s CEO, James Clements, explains how this company has become one to watch with a market cap of $20 million in just one year of operations.

We also speak to Matthew Banks, the head of Wildcat Resources which has reinvented itself as a gold prospector and is quickly getting runs on the board.

Always mindful of what is happening in global centres of excellence, this week’s 3Q’S picks up the phone to Brussels where the World Steel Association resides. Director, Andrew Purvis, tells us about the outlook for this essential industry.

Finally, a shout out to Bunsters CEO, Renae Bunster, who was profiled in our last issue and who this week raised A$2 million in crowdfunding through equity fundraising platform, Birchal (also profiled in Yield earlier this year). We should note that the Bunsters target was originally A$100,000!

Renae is on a roll (pun intended) with her hot sauce enterprise which has now diversified into liquor with the launch of the one-of-a-kind “Sh*t the Bed” vodka, and Birchal has proven itself the SME (subject matter expert) when it comes to crowdfunding.

Times are hard and a lot of businesses are clearly doing it tough.

For others, however, things have never been better.

Although it is probably too soon to call “full time”, for the moment, at least, it appears like a game of two halves.