Mining Experts Talk Prices, Production and More in a COVID-19 World

It’s been almost five months since COVID-19 was declared a pandemic by the World Health Organization, and investors are still trying to navigate the uncertainty brought by the virus.

At this year’s Sprott Natural Resource Symposium, Randy Smallwood of Wheaton Precious Metals (TSX:WPM,NYSE:WPM), Independent Speculator Lobo Tiggre, Matt Warder of Seawolf Research and Dan Ferris of Stansberry Research were featured in a panel discussing resources and the mining space.

Moderated by Brent Cook of Exploration Insights, the panel kicked off with a discussion of the participants’ views on investments in the current pandemic season.

Smallwood said that from a productivity perspective, his business has not lost anything at all as it was set up to be very mobile, but the “face-to-face” creativity is missing. The main priority for Wheaton Precious during this time has been the safety of all its employees.

“One of the benefits of our company is that we get to see how our partners get to manage risk, and we have a very active program on how we share information because all of us in this industry want best practices,” he told listeners at the online event.

During this environment, it has been key for Wheaton Precious to stay on top of what is happening with its partners and to keep its shareholders informed, Smallwood added.

“Probably the biggest challenge I’ve seen is due diligence when it comes to new investments,” he said, pointing to the current lack of site visits. However, Smallwood said stressed balance sheets have created opportunities for Wheaton Precious to provide support.

Speaking about not being able to travel and being on the ground, Tiggre noted that even though circumstances have been challenging, they have also provided him with the opportunity to buy stocks he had on his shopping list.

Giving his best learning point for investors, he said, “You don’t have to chase stocks, be disciplined.”

When asked about the topic of supply chains, Warder said that overall production is down.

“The challenge for supply chain analysts is to find where the bottleneck is — is it at the mine level like it was in Chile, or is it at the port level like it is China right now?” he said.

Giving his perspective on investments in the current climate, Ferris said investors should have a truly diversified portfolio. “What that means is you are in the financial system and you are outside of it,” he said. “So you are in it with your stocks and hold plenty of cash; then outside the system you hold physical metal and things like bitcoin.”

Switching gears during the panel, Cook asked Tiggre to share his thoughts on the uranium space.

“You’ve got to look for what is still cheap, and uranium is still cheap, it’s still below the cost of production … and uranium is having a significant breakout this year. But the stocks are still drastically on sale.”

“I love gold, I love silver, but the contrarian in me is looking for the next buy low, sell high opportunity — and uranium qualifies,” he said.

Challenging his views on uranium, Cook asked Tiggre why is he convinced uranium prices are set to change when they are at such low levels

“It matters that the prices are going up,” Tiggre responded. “The other point is that there’s no substitution … My worry is not the fundamentals of uranium, but another accident (like Fukushima). Absent that I am very bullish.”

Cook also asked Tiggre about the world moving toward renewables, such as wind and solar.

“It makes more political sense, (but) I am not sure it makes more economical sense,” Tiggre said. “Criticisms about how expensive nuclear designs are — I think (they) are about older designs, the newer designs are different.”

Speaking about the current opportunities in the mining space, Smallwood said the first thing investors must realize is that there are times to make acquisitions and there are times not to.

“Patience is one of the most talented attributes to maintain in an industry like this,” he said.

For Warder, the market is currently in the fourth or fifth inning of the precious metals bull market. “We are in for another year or so of strong precious metals prices,” he said.

Commenting on that, Tiggre said that in terms of price things could be set to get interesting. “Price-wise we could easily double or triple from here,” he said. “That implies some pretty crazy sounding prices … we’ve got a long way upward to go.”

In the exploration space, Cook said due to COVID-19 exposure risks, exploration has been held back a bit.

“Furthermore you have Australians that can’t come back, Canadians that can’t go there and Americans that can’t go anywhere — exploration is getting a lot tougher,” he said. (As an investor), make sure you have a number of companies across the range of terrains and environments.”

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.