Preview: With money in their pockets, prospects improve for small miners

Fury Gold Mines

03/03/2017 17:54

By Susan Taylor and Rod Nickel 
    TORONTO, March 3 (Reuters) - As mineral and metal prices 
have rebounded from a slump, so have the fortunes of small 
miners, and some industry experts are predicting even better 
times, ahead of the industry's biggest conference for explorers 
and developers. 
    Brighter prospects will be in focus at the Prospectors and 
Developers Association of Canada's conference in Toronto, Sunday 
through Wednesday. 
    The world's top miners are increasingly investing in 
exploration companies early on, taking "toehold" minority stakes 
to boost their odds of success.  
    "Majors have gutted their own exploration departments," said 
Theophile Yameogo, mining and metals advisory leader at 
consultant EY Canada. "They don't want to do leap-of-faith 
drilling." 
    After three years of declines, the world's junior miners 
showed a 7.4 percent uptick in equity financing to $7.29 billion 
in 2016, according to Thomson Reuters data.  
    They raised another $1.25 billion in January and February, 
well above $466.6 million a year earlier. 
    Supply constraints and healthy demand have lifted prices for 
several base metals. Copper, for example, touched a 20-month 
high of $6,204 a tonne in February, while zinc jumped from below 
$1,600 a tonne to $2,860 over the last year.  urn:newsml:reuters.com:*:nL4N1FY2VG  
 urn:newsml:reuters.com:*:nL5N1GE631  
    Political and economic uncertainty has helped support gold 
prices.  urn:newsml:reuters.com:*:nL5N1F24M2 
    "I believe the industry has seen its darkest days and is 
soon to be way up," said Richard Schodde, managing director of 
exploration adviser MinEx Consulting. 
    Goldcorp  G.TO , the world's No. 3 gold miner, acquired 
stakes of 12.5 percent in Auryn Resources  AUG.TO  and 19.9 
percent in Independence Gold  IGO.V  in the past year. 
    Major Drilling  MDI.TO , the second-biggest provider of 
drilling services to miners, told analysts on a recent 
conference call that customer inquiries were increasing 
alongside industry demand. 
    But even as the outlook improves for junior miners, Canada 
is losing its status as the preferred exploration destination, 
said the Mining Association of Canada, which points to 
regulatory delays, inadequate infrastructure and the recent 
elimination of tax incentives. 
    Australia took top prize as the world's best country for 
mining investment for the second consecutive year in 2016, based 
on policy and mineral potential, according to the Fraser 
Institute's annual survey of 2,700 miners. Canada dropped to 
second place, followed by the United States. 
    Australia's share of the global gold exploration budget grew 
by 4.3 percentage points, to 15.5 percent, from 2011 to 2016. 
Meanwhile, Canada's fell to 14.8 percent from 20.6 percent, data 
from S&P Global Market Intelligence's SNL Metals & Mining unit 
shows. 
    Both countries have lost market share to the rest of the 
world, and Canada is simply feeling the pain ahead of Australia, 
Schodde said.  
    "Canada was earlier to peak than Australia," he said. "So 
the gas tank is a little more empty in Canada." 
 
 (Reporting by Susan Taylor in Toronto, Rod Nickel in Winnipeg 
and Nicole Mordant in Vancouver; Editing by Denny Thomas and 
Lisa Von Ahn) 
 ((susan.taylor1@thomsonreuters.com; +1 416 941 8083; Reuters 
Messaging: susan.taylor1.thomsonreuters.com@reuters.net)) 
 
Keywords: MINING CONFERENCE/