Mines & Money Asia 2016

Like many established mining conferences Mines & Money Asia 2016 was down in the number of attendees and the number of exhibiting companies. However, this did not deter the core participants in this industry nor the investors that understand the cyclical nature of the mining sector. In fact, like any sector the conferences that are slow during the bottom of the cycle will present the strongest opportunities and management. These are the survivors. The Companies that will emerge and enter into the up cycle stronger, wiser and more attentive.

Every sector that goes through a severe downturn fuels the argument between “Things will never be the same” and “Things never change”. Is the mining industry forever changed or will the next bull market bring back the same irrational exuberance and belief that prices in both commodities and stocks will go up forever? Time will tell.

Regardless, one thing that is forever true, lessons are learned in failure. Hopefully the mining sector, and mining investors have learned a few new lessons but not at the expense of taking risk. It is risk taking that leads to new discoveries, new ideas and new opportunities.

Commodity prices have enjoyed upward performance year to date which has lead to many positive turnarounds in stock prices. Are we off the bottom? Its too early to call a trend. The position here is that we have scene the worst but may not see a strong, sustainable recovery for another year. Again. Time will tell.

PDAC Upbeat but cautious

PDAC 2016 was attended by over 22,000 people from all over the mining world. At this year’s show the sentiment remained somewhat cautious but more upbeat then last year’s conference. A noticeable drop in the number of companies attended was a reflection of the expected clean-up of companies that were under capitalized, and or under managed. The weak have been culled and the strong remain.

Despite the relatively positive performance in commodities, and upticks in many of the major mine companies, there was a noticeable absence of retail investors whom remain cautious. Many booths were hosted by the C-level management a clear sign of cost cutting (though C-level management should always make themselves available in good and bad times).

Most major companies are well off their lows for the year. Perhaps short covering,  or insider buying contributing the most. Concerns for over supply and weaker demand in China remain and supply demand balances have yet to settle the market price.

This may be the key year for accumulating positions in strong balance sheets and management. Taking a long term approach to the mining sector. Deals are getting done and the market has cut back on production in most commodities. Further downward pressures on commodity prices may be coming but most equities have not been drafted up with the run in commodity prices and may not be impacted by a future decrease.