Mar 3, 2017
Optimism abounds as miners descend on Canada’s PDAC Convention in Toronto
By Andrew Bell
Get set for a throng of shiny, happy faces on BNN next week as we bring you wall-to-wall coverage of the PDAC Convention, the world's biggest mining show.
Investors have been encouraged by a rally in metal prices and metal-digging stocks. As of Friday, copper was up 29 per cent in six months to trade at almost US$2.70 per pound. Bulls on the red metal are betting China's manufacturing sector, which drives the global base metal market, may kick-start a new program of infrastructure spending. And they're convinced that after years of sluggish growth, Donald Trump’s promised tax cuts will help juice the U.S. economy.
The S&P/TSX Global Base Metals Index - which includes giant companies such as Rio Tinto (RIO.N) and BHP Billiton (BHP.N) that haven't bothered listing in Toronto - has jumped 30 per cent over the same period.
Nearly 1,100 miners, explorers and suppliers will woo investors or hawk their services at PDAC. Space for exhibitors is sold out. Just over 22,000 attendees are expected, in line with last year, but down from almost 28,000 in 2011 when metal prices were hitting record highs of more than US$4.40 for copper and almost US$2,000 for gold.
This year's show "will be nuts," predicts Rick Rule, founder & CEO of Sprott U.S. Holdings and a long-time resource investor. "Optimism is back. Everyone thinks they're smart again." Rule fielded calls on resource stocks on Market Call this week.
Producers vow they won't blow it this time by flooding the market with new production.
"Instead of using their newfound bounty to unveil lavish growth plans, as they did in 2012 just as metals prices started plummeting, the cash is going to more sober uses this time: paying dividends and slashing debt," Reuters reported from the annual BMO-sponsored gathering of top mining executives in Florida.
Investors are still looking for more clarity on dividends from companies like Teck Resources Ltd (TECKb.TO), whose stock is up 31 per cent over the past six months, CEO Don Lindsay says that once debt reduction targets are met, "the dividend is going to be front and centre for the board."
Lindsay is one our regular guests at PDAC. He's set to join us on Tuesday at 11:30 a.m. ET.
Gold - always a favourite for small mine developers because it doesn't need a costly smelter and can be carried out of the mine in a single truck - has been threatening to poop the party.
It has slipped from more than US$1,300 six months ago to close around US$1,240 on Friday as U.S. interest rate increases loom, increasing the opportunity cost of holding bullion. The TSX gold stock index is down 16 per cent in the same period.
However, bullion is still up from lows of less than US$1,130 in December. And we'll hear from a raft of precious metals players.
On Monday, BNN will speak to another of our PDAC regulars: Silver Wheaton (SLW.TO) CEO Randy Smallwood. Shares in the giant gold-and-silver stream buyer have dropped almost 30 per cent in six months, weighed down in part by a tax fight with the Canada Revenue Agency. But Scotia reckons deals with giant mines such as Antamina in Peru in will help lift Wheaton's silver sales to more than 35 million ounces in 2018, up from less than 31 million in 2015, making it one of the world's top producers.
Commodities producer Mike Attenborough and segment producer Amanda Whalen have relentlessly pursed and lined up top mining executives and intriguing stories.
On Wednesday at 11:30 am. ET, we'll be joined by Kelvin Dushnisky, president of Barrick Gold (ABX.TO).
We'll talk zinc - currently one of the hottest base metals - on Monday at 11:30 a.m. ET with Kerry Knoll, executive chairman at Darnley Bay Resources (DBL.V). The shares have more than doubled in six months as the company advances its Pine Point lead-zinc project in the Northwest Territories.
Other highlights of our coverage: Junior-stock guru John Kaiser on Monday's Market Call at 1 p.m. ET, followed at 6:00 p.m. ET by Brent Cook, co-author at Exploration Insights, and his colleague Joe Mazumdar.
On Tuesday's Market Call at 1 pm. ET, it's the turn of Dynamic Funds portfolio manager Robert Cohen. His Dynamic Precious Metals fund soared almost 53 per cent last year.
And don't miss famed explorer and mine finder Shawn Ryan, principal of Ground Truth Exploration, on Tuesday at 11:30 a.m. ET. Agnico Eagle Mines (AEM.TO) just agreed to spend $14.5 million on thousands of his claims in Yukon.
See you at the show!
