Mines and Money blog - 01/12/09

Comment

Cold front from Dubai

As the seventh Mines & Money conference kicks off in London today, the story of the past year reads remarkably similar to the UK capital's recent weather conditions.

Gloomy skies and spells of poor visibility have eased, although the odd downfall could return over the short term. Last week's cold chill emanating from the Middle East continues to be felt around the world, and is seen as a remnant of the freezing global conditions a year ago.

Presenters representing junior and mid-tier companies at yesterday's pre-cursor event, Australia Day (part of the Investor Series organised by Mining Journal), spoke of recent oversubscribed equity raisings and +300% share price appreciation over a 12-month period. A year ago, the mood was starkly different, as one presenter at the time summed it up, it was “really quite a revolting time.” Basic industries had given up 57% in value since September, while the FTSE was down by 18% over the same period.

Since that day, almost exactly one year ago, the basic industries market has gained by 127%, this compared with the overall FTSE, which is up by 18%.

Investor presentations at last year's first day largely revolved around recommendations on how to adapt to "changing”, “new” and “challenging” market conditions. And while we aren't exactly at the “good times” and “buy with your eyes closed” point, this year's expert presentations will likely point towards a 'what next' scenario for a semi-recovered and outperforming resource sector.

Tuesday's highlights include Gartmore's Gervais Williams, who is speaking in the afternoon on 'Managing the ups and downs of the commodity cycle', and SAMI funds' Anthony Desir, who is asking 'Where are we in the supercycle?'. Shortly afterwards, JP Morgan fund manager, Ian Henderson, will explain, amongst other things: 'what makes a good investment in the resource sector', 'lessons from the past 12 months' and, most importantly: 'where do we go from here?'.

On the exhibition stands, Colin Bird, who was spotted during setup on Monday evening at his Jubilee plc stand, will likely be a popular man. This follows last week's decision to sell Kiwara plc, a company he chairs, to First Quantum for US$260 million.

Overall this year's event promises to be a contrastingly upbeat affair, and expect the participants to lay a marker for what is likely to be an eventful 2010.