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North American investors 'materially underweight' in Australian miners

North American institutional investors could potentially inject billions of dollars into the Australian mining sector, according to PCF Capital Managing Director Liam Twigger.

"As part of any strategy for any junior company or mid-tier company, North America has got to be on your radar," he told delegates June 8 at the Association of Mining and Exploration Companies Convention in Perth, Australia.

"They are materially underweight on ASX mining stocks."

According to Twigger, North American institutions hold about 40%, or US$17 billion, of the top 30 gold stocks on the TSX, but only hold 27%, or US$6 billion, of the top 30 gold stocks on the ASX.

"If you could get these North American institutions to take 40% of the top 30 Australian gold stocks, that would bring another A$4 billion in value into the Australian market."

"We've seen that appetite for risk, they're very comfortable with Australian mining exposure."

Twigger pointed to the success of Ian Murray's Gold Road Resources Ltd.

"40% of [Gold Road's] register was held by North American institutions. So that's the benchmark. There is an appetite for North American institutional investment in Australian mining stocks and juniors."

Meanwhile, the growth of exchange-traded funds, or ETFs, will also provide further opportunities for advanced exploration companies.

Twigger said ETFs have typically been injecting capital into producers and developers, but there will soon be an ETF targeting advanced explorers.

Total funds injected into Van Eck's gold ETFs have trebled to US$14.2 billion since January 2016.

"Returns have been insane and they've just seen such an outpouring of money," Twigger said.

"The growth and influence of ETFs is only going to increase and they will push down into the exploration market. I think the junior sector is going to feel a lot more love as a result of these ETFs."