M&A is a major trend in the mining space right now, but what might investors be missing? Paul Robinson of CRU Group weighs in.
M&A activity is a major trend in the mining space at the moment, but what else should investors be paying attention to in 2019?
Paul Robinson, director at CRU Group, answered that question at the recent Prospectors & Developers Association of Canada (PDAC) convention, saying environmental developments are key.
“The short-term thing to look out for is sudden changes in legislation,” he said. “If you have exposure to scrap processes and suddenly Category 6 changes overnight, you better be on the right side of that position. If you’ve got exposure to plastics, if you’ve got exposure to other forms of environmental change, there may be upside opportunity there, […] but there may be risk.”
He suggested that the key for market participants is to understand the risks involved in their investments. “Maybe, particularly in 2019, look at the environmental legislation that underpins your belief in that particular stock or that particular commodity.”
Robinson also shared his thoughts on the resource sector as a whole, commenting that “the industry is well positioned, now, for whatever comes over the next 12 to 18 months.”
That’s because miners have “paid down their debt, [and] we’re still in a scenario of positive free cash flow; dividends have started to return.” According to Robinson, that means “if there’s a weakening of credit, there’s a lot more control now in the miners’ hands on how to allocate capital, how to allocate that free cash flow. So it feels like a better operating environment for them going forward.”
Watch the interview above for more of Robinson’s thoughts on the commodities space, including why he’s positive on the copper story and the “classic misnomer” that’s left battery metals prices low despite strong demand. You can also click here to view our full PDAC 2019 interview playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.