World’s top mining executives and merchant bankers met in Toronto to ponder over the new global energy landscape, which includes battery metals
Vasudha Sharma | October 6, 2017 | SmallCapPower: In partnership with the Government of Ontario, the Mines and Money Americas show came to Toronto on October 2, 2017, for three days of deal-making and debate over the future of the mining industry. The show travels across the world’s mining capitals, creating a local marketplace that connects miners with money-makers and spotlights emerging opportunities, such as battery metals, and the critical challenges that are shaping the industry.
Related: Lithium, Cobalt Stocks Climb Despite a Potential Lithium-Ion Battery Challenger
The growth uptick in the mining sector since the start of 2016 was evident in the mood and the industry participation at Mines and Money Americas in Toronto. From institutional investors, top financiers, analysts to mining companies, over a 100 speakers participated in panel discussions sharing their insights.
The Mines and Money Show runs with the catchphrase, ‘Where deals get done’. And with multiple one-to-one meeting rooms set up at the venue, you could see hectic deliberations between senior executives of mining companies and high net-worth investors.
Veterans and Mining Juniors in Attendance
Andrew Thake, Global Head of Content and Production at Mines and Money, summed up the three days saying, “The 700 attendees enjoyed inspiring speaker sessions and panels, thought-provoking roundtables and of course loads of networking. Along with Ross Beaty sharing his insights on renewable energy, there were robust debates on lithium, cobalt and uranium. And over 400 meetings were confirmed onsite with Meetmax, enabling investors and miners to connect and get deals done.”
“A couple of years ago, it was very difficult to run a conference like this because there would have been no attendees,” says Keith Barron, CEO of Aurania Resources (TSXV: ARU). “The mining business especially, junior mining was on its back and nothing going on and of course now we have got new stories in the lithium space, in the cobalt space, in the gold space. So it’s a pretty great turnout,” Barron said.
“We like the face to face contact with investors which this brings” said Carlos Vicens, CFO of Neo Lithium Corp. (TSXV: NLC). “But we also like the fact that we also talk to peers here and we talk to potential strategic partners.”
Warren Irwin, President and Chief Investment Officer at Rosseau Asset Management said, “There’s a lot of interest here on lithium and cobalt and some of the new metals, which people believe are used for batteries. It’s nice to talk to people about those and then talk about some of the new battery technologies that don’t use lithium and how that impacts that market place. It’s really about exchanging ideas making sure that we don’t miss out on the great big opportunities.”
Industry stalwarts like Ian Telfer, Chairman of Goldcorp (TSX: G), also lent his weight to show, sharing his outlook for gold and equities in a special fireside chat. ”This is my first time at Mines and Money conference in Toronto. I am thrilled to see so many companies and so many people attending this year. I think the level of enthusiasm is very high. And I continue to think that the mining industry in Canada and around the world has a very bright future,” Telfer said.
Rick Rule, Chairman and Founder of Sprott U.S. Holdings, along with Don Coxe, Global Capital Market Strategist at Coxe Advisors, led a colourful debate on the impact of the Trump presidency on mining and commodities. Most experts concurred that, ‘small is beautiful’ in the mining industry. And that investors should rather focus on high-grade small mining situations that are not capital-intensive.
Lithium and Cobalt Steal the Show Despite Supply Concerns
The dominant theme and dialogue was of course around the role of battery metals like lithium and cobalt and their global demand given the ambitious mandate set out by governments across the world to electrify vehicles. Many experts in attendance at Mines and Money Americas were vocal about the global obsession with lithium and cobalt right now.
Sharing his outlook with SmallCapPower, Chris Berry, Founder of House Mountain Partners, said, “My sense is that for lithium and cobalt, you are looking at tight markets, meaning balanced to potential undersupply to 2019-2020. These markets are so small right now and the pricing is so opaque. But all along the lithium supply scene, be it cathode manufacturers or automotive manufacturers, it’s everybody along this lithium ion battery supply chain that are making really sizeable investments. I mean even a company like Volkswagen, they are talking about 50 or 60 billion Euros in battery supply chain investments. So I am encouraged because you are also seeing countries like the UK, France or the Netherlands talking about banning internal combustion engines by 2040 roughly. And of course when China, which is the elephant in the room, goes through that transition, it will be huge for the demand for these metals and minerals.”
But it is cobalt that everyone was concerned about. The Democratic Republic of Congo supplies over 55% of the world’s cobalt. But internal strife chokes supply and that’s what is bumping the price higher.
“Cobalt is going to stick around,” according to Jay Roberge, Managing Director of Tehama Capital, while speaking to SmallCapPower at Mines and Money Americas. “There’s eight battery chemistries out there and out of those there are two that do not require any cobalt. So it’s definitely the one out of all of them that’s most critical to be watching and investing in if you can find the opportunity. Definitely there are some equity plays you can look at, like exploration players like King’s Bay Resources Corporation (TSXV: KBG) in Newfoundland to Producers like Cobalt 27 Capital Corp. (TSXV: KBLT) that give you a direct exposure to physical cobalt. There’s lots of opportunities for investors. And cobalt is definitely one to focus on,” he says.
Gold’s Everlasting Sheen and Why Copper is Key
At Mines and Money Americas, the industry chatter also swerved towards gold and where it stood amidst the rush for battery metals. The question raised was that with peak gold past, were there any reasons to invest in gold today? Experts and miners were unanimous that there was reason to back the yellow metal.
“Gold should perform well over the long term,” said Jonathan Goodman, President and CEO of Toachi Mining Inc. (TSXV: TIM). “The one issue countries haven’t been able to tackle is the debt scenario and you will see debt to GDP ratios going up amongst all the places in the world, which should long-term devalue these currencies relative to gold. So you can feel confident that you will see higher gold prices at some point in the future,” according to the new Toachi boss.
Mining executives at the show also highlighted that the world’s insatiable appetite for copper is a space that investors can dig into. The ubiquitous copper is practically in everything today from batteries to electric vehicles to wind turbines and solar power systems. Speaking at Mines and Money Americas, Nik Mather, CEO of Australian miner SolGold said, “The demand for copper is going to outpace supply and therefore the price is going to go up.”
Mining Innovation in the Digital Age
While the floor buzzed with conversation about metals and minerals, another section of the three-day conference saw the industry brainstorm ideas to lay out a new digital roadmap to optimize their mining operations. Automation, Big Data, Virtual Reality, Laboratory Robotics, Networked mines were just some of the topics that set the agenda for the Mines and Technology summit that was held alongside the Mines and Money conference.
Bre-X Scandal: A Retrospective
Also a special retrospective session was held on the infamous Bre-X scandal that took place 20 years ago. On false claims of holding a rich gold deposit, a penny stock climbed to $200 a share on just aggressive marketing. An embarrassing period in Canadian corporate history, this gold-mining fraud wiped off millions from investors holdings. Individuals who were closely affected by the Bre-X incident discussed whether the new standards and regulations that were introduced post Bre-X had eradicated the problems of over-promotion and exaggeration? Keith N. Spence, President and CEO, Global Mining Capital Corp explained why it was relevant to revisit the episode two decades later.
“Why is Toronto the mining capital of the world? Why is Canada the thought leader for mining? It is because our country and Toronto and Vancouver to some extent had retail investors who were prepared to take a punt, prepared to take a risk and gamble. We had a culture where people understood or had a sense that they knew this business or even if they didn’t know it, they felt comfortable around it to put a punt. What has happened since Bre-X is that the amount of retail investors has dropped considerably compared to institutional. Now it is the complete opposite. So I think it’s important now to talk about why the retail investor has deserted this market. It’s appropriate now 20 years later to look back and see what has changed. We have prevented another major Bre-X. But there are at least half a dozen incidents, not all fraud but some genuine mistakes or errors since Bre-X.”
After a successful event in Toronto, the Mines and Money Show next travels to London to further the agenda of a sector that is undergoing both a recovery and a complete redirection towards low-carbon commerce.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in any of the companies mentioned above.
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