PDAC: Juniors Pleasantly Surprised by PDAC Atmosphere

On Monday, The Gold Report published an interview that touches on what various thought leaders felt about the mood at the 2014 Prospectors and Developers Association of Canada (PDAC) convention, held last week in Toronto. 

While some saw it as fairly bleak — Brent Cook, publisher of Exploration Insights, said there was “an overall lack of ‘buzz’ and news releases” — a number of interviewees described sentiment as cautiously optimistic, yet realistic.

For instance, what stood out for Jordan Roy-Byrne, publisher of The Daily Gold, “was the muted bullish sentiment or cautious optimism from the industry.” Similarly, Adrian Day, chairman and CEO of Adrian Day Asset Management, said that “[w]hile crowds were thinner, the mood was a little more optimistic, though realistic.”

Speaking to junior miners at the show, the Investing News Network (INN) found that many echoed that realistic optimism. “I’m very happy with the attendance and the flow through the booth,” said Steve Stakiw, vice president of investor relations at Trevali Mining (TSX:TV). “It feels a bit smaller than last year given the market circumstances. But nevertheless, the quality is still good.”

Similarly, Paul West-Sells, president and COO at Western Copper and Gold (TSX:WRN,NYSEMKT:WRN), commented, “everyone was a little worried. There’s certainly a few empty booths.” Even so, his company’s booth drew “fairly steady traffic” and “pretty good investors.” He added, “I think who’s here is the knowledgeable people, certainly some of the funds that are in mining are here, and it’s been better than we expected.”

Eric Desaulniers, CEO of Nouveau Monde Mining Enterprises (TSXV:TSS.P), also commented on the presence of funds, noting, “I’ve met some funds … [and] they are looking to invest in mining.” Continuing, he said, “that’s the first time since [I’ve been] CEO that someone is telling me that he’s looking to invest in the junior market. So I think it’s looking very good for 2014.”

For their part, Carrie Sikman, vice president of investor relations at Brixton Metals (TSXV:BBB), and Mike Rideout, president of Latin American Minerals (TSXV:LAT,OTCQX:LATNF), both touched on the fact that the market seems to have hit bottom. “At least we’ve found bottom on gold,” said Rideout. “It’s nice to see the mood recover and people take an interest in exploration projects and gold exploration in particular.”

Similarly, Sikman commented, “there’s been a shift in the sentiment in the last few months around the resource space; certainly mining as a whole seems to have finally kind of reached rock bottom. I’m certainly not a market analyst, I’m not an economist, so take my word with a pinch of salt, but it feels like there’s optimism in the air.”

Further, she said, “this year everybody’s engaged, they’re looking for the stories, they know that the companies that are still here are the ones that have a good story, that have a good project, and they’re really eager to find those projects.”

The idea that the companies that remain are the good ones also came up in INN’s conversation with Mecenary Geologist Mickey Fulp, who said that the market is not in “a broad-based rally.” Rather, “this is the good companies, the cream rising to the top.”

However, Fulp also said most juniors “are still in a world of hurt,” noting that he believes “a bunch of them need to go away” — 500, to be specific. One thing that’s preventing that from happening, he explained, is that “the TMX, the owner of the stock exchange, is a publicly listed company, and it has a vested interest in keeping these companies around for the filings fees and the compliance fees and everything that involves, because that’s the way they generate their money and profit for their shareholders. So they keep throwing the juniors lifelines, making financings easier, lowering the terms.”

Of course, that statement raises the question of what investors can do to identify the companies that will continue to survive. In response to that query, Fulp said, “you need good share structure — most of these companies have blown out their share structures.” Also necessary is “management that has experience in this business and has been successful before in this business,” along with “cash in the bank or the ability to raise money without severe dilution.” Most important, of course, is a good project.

In closing, Fulp issued the reminder that “this is a high-risk, high-reward venture … you will not be successful all the time, but the amount of money you can make with occasional successes will more than cover your losses on other stocks. So don’t be afraid to buy and sell.”

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

Related reading: 

PDAC: Is China Buying Gold to Eliminate US Dollar as World Reserve Currency?

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Western Copper and Gold (TSX:WRN,NYSEMKT:WRN) President & COO Paul West-Sells Anticipates Construction in Two Years