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Mining investment spotlight moves to San Francisco

It’s on to San Francisco for mining-focused investors and company chiefs after the recent sold-out Beaver Creek and Denver Gold events in Colorado as the former search for new signs of an emerging commodity bull market, and competition for their attention among junior companies intensifies.
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The 2018 Silver & Gold Summit in San Francisco will run over October 28-29

Staff Reporter

Last year's third annual Silver & Gold Summit in San Francisco drew more than 1,500 attendees to hear 88 junior company presentations. This year organiser Cambridge House is promoting "over 70" presentations to a similar number of attendees, including investors.

The 2018 summit will run over October 28-29 at the Hilton San Francisco Union Square Hotel.

"The demise of venture capital has narrowed the availability of risk capital and intensified the competition for what little is available," the CEO of recently launched explorer Sun Metals, Steve Robertson, told Mining Journal.

"The challenge for companies with good projects and good momentum is to demonstrate their value propositions to potential investors, given the common perception that the sector will stay undervalued for the foreseeable future."

The Silver & Gold Summit follows on the heels of September's record attendances and corporate participation levels at this year's Beaver Creek Summit and Denver Gold Forum, in Colorado.

Cambridge House has built a reputation for gathering high net worth retail investors and company decision makers. The group says more than half the attendees at its most recent conference had more than US$100,000 invested in junior mining stocks; 20% had over $500,000 invested.

As well as the junior company presentations, this year's event programme will give various investment heavyweights and analysts a platform to share their investment strategies and market views. A strong line-up of, junior and mid-tier industry movers will deliver market and project updates, and the US uranium market will get some time in the spotlight as spot prices for the commodity edge past the US$27/pound mark.

San Francisco summit keynote Rick Rule said recently the speculative appeal of the uranium sector had grown. He said International Energy Agency data had the "fully loaded cost to produce a pound of uranium [including the cost of capital]" at about $60/lb.

"So right now the industry worldwide makes the stuff for about $60/lb … sells it for $25/lb [and] loses about $35/lb, and of course, tries to make it up on volume. This doesn't work well," Rule said.

"[So these] very low uranium prices have done a very important thing. They've begun to wreck supply."

Rule said high-profile mine closures and production declines in Canada and Kazakhstan would continue to stimulate higher pricing while the outlook for demand was strong and not simply reliant on big capacity build programs in China and India.

"For countries that think they're wealthy enough to not have to rely on nuclear power, like the United States, nuclear power still provides 15% of baseload power — importantly it's non-carbon generated power, so in an era where there's concern about global warming, where you have a difficult time building new oil or gas or coal powered plants, uranium is part of the energy future, but importantly — it's part of the energy present," he said.

"So when you balance the supply and demand equation with supply destruction — the upside that you can see in commodity prices is much greater than otherwise would be the case.

"If you have a circumstance where you know uranium is part of the energy future, and you know the industry loses money on every pound of uranium it produces, the question you have to ask yourself is, will the price of uranium go up — or will the lights go out?"

Returning optimism?

While uranium equities have taken a hammering in recent years, and others have also found themselves on the outer with investors over the past 12 months, there is a growing sense the broader market apathy has left many precious metals stocks particularly under-priced.

Some have used lists of current company valuations to describe a "Walmart sale".

Rule has said at a time of increasing demand for high-quality deposits, the equity side of the exploration market "is unknown, unloved, unwanted - perfect" in reference to the potential value in the market for speculators and more sophisticated investors, including larger mining companies looking to restock depleted project pipelines.

There has been much commentary around the potential impact of US interest rate hikes on precious metal market sentiment and prices, much of it hinting at good prospects for gold to snap out of its current malaise.

"Rick Rule likes to say that bull markets follow bear markets as day follows night," said James Anderson, CEO of NuLegacy Gold Corporation.

"I think a new day has arrived in precious metals, but the market has missed its alarm clock, and slept in a little.

"When it wakes up, it will jump into a bull market very quickly."

Robertson said new money had been looking for opportunities in numerous resources, including gold and silver. With that investment would hopefully come new discoveries to excite the market.

"High-grade, low-risk opportunities will be the first movers," he said.

A flight to quality and away from low-grade, high-capex projects also saw capital becoming increasingly wary of unsafe jurisdictions, though "grades remain king and could to a large extent mitigate perceived geopolitical risks for a project".

"Society needs metals and it is just a matter of time before investors start believing in the junior and mid-cap space again," Robertson said.

"It's a good time to be deploying capital, as the market could arguably only get better from here on. We might have seen a flicker of optimism in the equities market over the past two weeks, but that doesn't say anything yet."

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