PDAC is over, and now it’s time to look back on what experts said at the show. Here’s a full list of all our resource-focused content.
This year’s Prospectors & Developers Association of Canada (PDAC) convention has wrapped up, but lessons about the resource sector remain for investors.
The Investing News Network (INN) spent time at PDAC speaking to experts about metals prices, major trends in the industry and more, and, now that the event is over, it’s time to look back on what they said.
Read on for an overview of all of our resource-focused content from the show. You can also click to view individual lists of our precious metals, base metals, battery metals and energy content. For a full list of our PDAC video coverage, check out our PDAC 2019 playlist on YouTube
Speaking with INN, outgoing PDAC President Glenn Mullan reflected on his time at PDAC and shared details on his conversation with Prime Minister Justin Trudeau.
“We actually talked about the things that matter to our members, like [the] mineral exploration tax credit, community corporations and how they do partnerships, in particular aboriginal. And then some of the things that the government helps us with or needs to help us with more with regulation,” said Mullan.
Merger and acquisition (M&A) activity was top of mind at this year’s PDAC convention — at the show, Rick Rule of Sprott (TSX:SII,OTC Pink:SPOXF) shared his thoughts on how to profit.
“You should look to companies that are going to be acquired, particularly if you’re a trader. The real money will be made backing the teams that buy the assets that get shed by the majors,” he said.
Brent Cook and Joe Mazumdar of Exploration Insights spoke at this year’s PDAC convention about exploration and gold mega mergers. Like Rule, they suggested that opportunities may arise for smaller companies as large miners begin to divest their assets.
Brian Leni of Junior Stock Review sees opportunity in risky jurisdictions where modern exploration has not yet taken hold. At PDAC, he also shared his thoughts on where precious metals prices may be headed in the year to come.
Leni discussed risky jurisdictions in his PDAC presentation as well — read an overview here to find out which specific areas he’s interested in.
Mark Ferguson of S&P Global Market Intelligence discussed another aspect of M&A activity at PDAC, explaining that the new, larger companies that result could end up spending less on exploration.
“Often what happens is that the resulting company ends up budgeting less the following year than [was budgeted] in the preceding year by the two separate companies,” he said, noting that these decreases are usually the result of exploration synergies.
“The juniors no longer have the excuse that cannabis is sucking the oxygen out of the room — that play is dead,” said John Kaiser of Kaiser Research at PDAC. With cannabis and other “momentum-type plays” out of the way, he believes the outlook will brighten for junior miners moving forward.
M&A is a major trend in the mining space right now, but what might investors be missing? Paul Robinson of CRU Group weighed in at PDAC, suggesting that 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.”
Aside from Robinson, INN also asked a number of other experts what trends they think investors might be overlooking. Read the article above to find out what’s on their radar.
Similar to Kaiser, Jeff Swinoga of EY Canada also hopes to see junior miners experience more success in 2019, especially in attracting capital for exploration.
“If you look at some of the investment dollars … in exploration in particular, it’s going more into existing mine site exploration as opposed to grassroots exploration,” he said, noting that this trend is impeding new discoveries, which have been scarce in recent years.
The trade war between the US and China has weighed on many commodities over the past year, but financial analyst Jayant Bhandari thinks it won’t last.
“The negative effect that commodity prices faced because of unwinding of speculative positions in some of the commodities should revert back to normal,” he explained to INN, adding that commodities have a short-term upside because of that.
Last year wasn’t stellar for the resource space, but Kai Hoffman, CEO of Soar Financial Group, believes there’s hope for investors in 2019, partially due to flow-through financings.
“I think flow through has been picking up, I think that’s one really important trend,” he said. According to Hoffman, flow-through financings act as “sort of a safe haven — [they are] a safe backup, it’s a safety net for many companies … It helps you advance projects, it helps create news flow in a time where news flow is very rare.”
Conservative Shadow Minister for Natural Resources Shannon Stubbs spoke to INN about Canada’s new Minerals and Metals Plan, calling it more “aspirational” than a true plan of action.
“That’s exactly what we plan to unroll as we get to the next election and afterwards — to really talk in specifics about the ways that Canada can improve our competitiveness and our certainty to continue to be a world leader,” she said.
During PDAC, news hit that a C$5.1-million investment from the Canadian government will support the resource sector in the Northwest Territories.
“This investment will increase access to the world-class mineral deposits located in the region and lower the cost of mineral exploration and development,” said Wally Schumann, minister of infrastructure and minister of industry, tourism and environment in the Northwest Territories.
Image courtesy of www.pdac.com.
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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.