Preview: Battered miners see glimmer of hope ahead of Toronto meeting
04/03/2016 15:56
By Euan Rocha and Rod Nickel
TORONTO/WINNIPEG, March 4 (Reuters) - Metal and mineral
explorers battered by a protracted price slump are still out of
favor with investors, however the recent uptick in bullion
prices and a few tie-ups with larger miners are offering juniors
a glimmer of hope.
The ray of optimism comes as the world's mining sector
prepares for its largest annual gathering, the Prospectors and
Developers Association of Canada convention in Toronto. The
meeting set to begin Sunday is expected to draw some 20,000
attendees.
Canada is home to the vast majority of the world's
publicly-listed mining companies. Most are early-stage gold
exploration companies, so a near 20 percent jump in the spot
gold price .XAU to above $1,250 an ounce has boosted gold
miners of all sizes.
"Something is happening in the gold market and people are
waking up to it," said Agnico Eagle Mines Ltd AEM.TO AEM.N
Chief Executive Sean Boyd, noting that lackluster global growth,
the diminishing likelihood of a U.S. Federal Reserve rate hike
and negative interest rates in many countries bode well for
gold.
The NYSE Arca Gold Bugs Index .HUI , which includes some
large gold miners, has risen some 55 percent this year. Even the
S&P TSX Venture Composite Index .SPCDNX , whose components
include many small gold-exploration companies, is up nearly 20
percent in the last month and a half.
"We're now more comfortable talking about a commodity price
recovery. The challenge of course, is what this recovery might
look like?" said BMO analyst Jessica Fung, noting the mood was
more positive this year at the bank's annual mining conference
that just ended in Florida.
"We think it will be a long hard climb, but at least we can
talk about it now."
Even so, miners are hurting and some may struggle to survive
another year, especially with limited price recovery on the base
metals side.
"It's just a very tough time for a prolonged period," said
Blake Langill, a mining expert with Ernst & Young.
Still, there has been some revived interest, even for
beleaguered base metal players, with copper explorer Aston Bay
Holdings Ltd BAY.V inking a tie-up with BHP Billiton Ltd
BHP.AX on their project, while two rivals, Avala Resources Ltd
AVZ.V and Reservoir Minerals Inc RMC.V late last year signed
similar tie-ups with Rio Tinto Ltd RIO.L RIO.AX . urn:newsml:reuters.com:*:nL2N15C16Y
"Last year, we all thought we were at bottom. That wasn't
the case," said PDAC president Rod Thomas. "We're convinced
we're now at bottom and we see a bit of light at the end of the
tunnel."
(Reporting by Euan Rocha in Toronto and Rod Nickel in Winnipeg;
Editing by Marguerita Choy)
((euan.rocha@thomsonreuters.com; +1 416 941 8185; Reuters
Messaging: euan.rocha.reuters.com@reuters.net))
Keywords: MINING PDAC/PREVIEW