As the dust settles in Vancouver following twin investor conferences last weekend, junior mining stocks investors are left to ponder when the market turnaround everyone is predicting will actually happen.
That was one of the key questions to emerge from both the Vancouver Resource Investors Conference (VRIC) at Canada Place and the Vancouver edition of the Metals Investors Forum which took place just before.
Kerry Lutz, of FinancialSurvivalNetwork.com, attended both events and found a mature investor base, hardened from long lean years, still sensibly preparing for an eventual turnaround in commodities and mining markets.
“The market is muddling through, but there’s plenty of money there, sessions were well attended and there’s a feeling of guarded optimism that the stars are starting to align,” he said.
‘Junior Mining Junky’ David Erfle got a similar sense of expectation from VRIC, even among the gold stocks which have arguably enjoyed a better run in recent years. He said the gold mining sector’s recent mega-mergers gave a strong indication of things to come at the junior end of the scale, but it could be some time before activity trickles down:
“The major [gold] companies are running out of high-margin ore and they need to replace it. They know the M&A among the juniors is coming, as we all do, we just don’t know when. [The junior gold companies] just need to keep proving up their deposits and keep drilling.”
The message, echoed elsewhere at the conferences, was that resource investors need to hold their nerve.
VRIC also featured a focus on uranium on the second morning, which laid bare differing market expectations even among major operators: a panel of uranium company execs couldn’t agree on an outlook for the world’s nuclear fuel. While two thought $80 too optimistic, another industry chief backed prices moving towards $100 and a further exec thought US prices could go higher still. Meanwhile, Mene Inc., the online jewellery firm focused on precious metals, was favourite among a ‘top picks’ contest at VRIC, beating various stocks at the extraction end of the sector.
In other news, Business in Vancouver berated the Canadian government for its licensing regime, which it says no longer provides any certainty that companies can in fact get projects off the ground, because everything is now vulnerable to negative public opinion and protest - or ‘social license’.
The business group quoted a timely EY report confirming that “licence to operate” is the single biggest concern expressed by the mining industry; and Marin Katusa of Katusa Research, who added: “Even if you get a permit, it doesn’t really mean a permit anymore in Canada.”
Ironically, Business in Vancouver makes the case that this public pressure - often connected to environmental concerns - is hampering British Columbia’s participation in the booming low-carbon economy. It’s argument: that converting the world’s transportation to electric power requires huge amounts of minerals present under BC’s wildernesses. Copper, lithium and cobalt are among the metals and minerals crucial to modern ‘EV’ production.
Battery-grade nickel might also play a part in the electric future, and the Americas may yet play a part as analysts at Wood Mackenzie this week poured cold water on reports that cheap nickel products from China and Indonesia were about to push prices through the floor. They said the amount of nickel coming to the market from these projects will be smaller, slower and more costly “than so far alluded to”, and the nickel market faced at least another two years of under-supply.
Woodmac’s analysis makes it a double dose of good cheer for Balmoral Resources, as the miner revealed it has discovered several new nickel sulphide zones during its fall 2018 exploration program. The finds are in the central part of its Grasset Ultramafic complex in Quebec.