Investors and speculators were told to look for “pockets of opportunity,’’ in areas such as “discovery exploration,” cobalt and zinc resource stock picks
Peter Kennedy | May 30, 2017 | SmallCapPower: An uncertain outlook for gold and copper is putting a damper on a recovering junior mining sector, requiring investors to be selective when making resource stock picks.
That was the clear message from the International Metal Writers Conference, which kicked off in Vancouver on Sunday.
Mining industry officials say it is evident that the sector has “turned a corner” following an extremely difficult downturn that prompted many investors to throw in the towel.
However, a full-blown recovery will likely be delayed until the price of both gold and copper move significantly higher from their current trading levels.
Meanwhile, investors have been told to look for “pockets of opportunity,’’ in areas such as “discovery exploration,” cobalt and zinc.
“Gold is such big driver of overall market sentiment,’’ said Steve Williams, Chief Executive Officer of Pasinex Resources Ltd. (CSE: PSE), which has developed a high-grade zinc mine in Turkey. “But gold is still languishing and that makes me cautious,’’ he said.
It is why Williams is glad that his company is increasing its zinc production at a time when the metal has rallied on the back of a depletion cycle that is not being replaced by new supply.
Still, Jay Martin, the President of conference organizer Cambridge House International Inc., said he is pleased that 3,500 attendees registered ahead of the two-day event, which features opinions from some of North America’s top investment newsletter writers as well as top names from the mining sector.
Martin said over 300 had signed up for one on one meetings with issuers in the conference room’s VIP area.
In spite of hot weather, it was standing room only at 8.30 a.m. Sunday when a panel of newsletter writers revealed their top stock picks in the sector. The panel was moderated by Sprott U.S. Holdings Inc. CEO Rick Rule and featured John Kaiser, Brent Cook, David Morgan, Jason Hamlin and Nick Hodge.
“The key to making money in the sector is getting as many kicks at the can as possible,’’ said Cook. It is why he is telling investors to take a look at so-called “prospect generators’’ like Riverside Resources Inc. (TSXV: RRI), which has $6 million in the bank and a portfolio of gold, silver and copper projects in Canada, the U.S. and Mexico.
The panel’s other top picks included Midas Gold Corp. (TSX: MAX), Alexandria Minerals Corp. (TSXV: AZX), Skyharbour Resources Ltd. (TSXV: SYH), Arizona Silver Exploration Inc. (TSXV: AZS), and Eurasian Minerals Inc. (TSXV: EMX).
Also attracting attention is Marathon Gold Corp. (TSX: MOZ), which recently closed an $18.6 million bought deal financing, money that will be used to fund exploration at the Valentine Lake gold property in central Newfoundland. The fact that the underwriting syndicate was co-lead by RBC Dominion Securities and Haywood Securities is a sure sign that major players are once again eyeing the sector, said Marathon spokesman Chris Haldane.
Toachi Mining Inc. (TSXV: TIM) CEO Nick Tintor was among the speakers at the Metal Writers conference. He flew in from Toronto, hoping his attendance will pay off as it did a few months ago when a group of U.K investors he met in the U.S. helped the junior to raise $4 million from a bought deal offering for exploration at the company’s VMS polymetallic project in Ecuador. “It’s still very selective out there,’’ Tintor said, adding that investors are focused on undervalued, advanced projects with high-grade metal values.
“Getting money for high-risk projects is tougher,’’ he said. However, Tintor believes the success of Yukon explorer White Gold Corp. (TSXV: WGO), is a sign that exploration stories can get financing if they have a good tale to tell.
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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