PDAC 2016 Unleashes A Signal

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Quite possibly since inception, the Prospectors & Developers Association of Canada (PDAC) has been recognized as the mining industry’s global kingpin. It is the place for industry participants to share corporate war stories with each other, meet-and-greet with investors and generally enjoy the camaraderie amongst colleagues and friends…almost akin to when a professional sports team heads out on a road trip bolstering and bonding its relationships. It’s a long conference lasting four days…which many are calling overkill…especially given the sorry state of attendance on the fourth day.

Still, following a 2015 of catastrophic investor interest in our sector, it’s safe to say that most of us went into PDAC 2016 with bated breath. Clearly, we were not surprised by the low level of company participation (booths beside us and across the aisle were both empty) as witnessed by the core shack immediately adjacent and on the same level as the investors exchange. This is a big deal as in years past this entire section was completely full with resource companies. The good news is that the “fluff” in our industry is finally starting to fall by the wayside and clear way for the best of the best. We’d say it’s long overdue… We are also happy to report that there is definitely a hint of a changing investor sentiment towards our beloved metal…gold…we don’t want to go as far by stating today the bear has finally lost its grip, but comparing to last year’s PDAC, there are certainly telling signs that we are nearing the return of the gold bull.

Buying The Blood in the Street or Battening Down the Hatches —- It is no secret our sector is in dire straits at this time. Given that there are still more negative outlooks and financial reports from the seniors on the way (more writedowns and credit downgrades) q1 earnings season is not going to be pretty. The question many are asking, is it a time for corporate “prevent style defence” or an opportunity to go “full court press offence” and take advantage of low pricing opportunities motivated by fear? Not surprisingly most of the mining seniors at the conference are playing defence…choosing safety first… bandaging war wounds and hunkering down. The giants in our industry are taking quite a beating and planning to weather the storm in 2016. What this tells us is not to expect any major headliner deals anytime soon. For the sake of the mining market, let us hope for these debt heavy behemoths that Goldman is proven incorrect on its nasty 2016 gold price prediction.

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