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PDAC 2014: What to watch for at the mining industry’s biggest event

PDAC 2014: What to watch for at the mining industry’s biggest event

Posted by Juan Gavasa on March 02, 2014

Sunday marks the start of the global mining industry’s biggest annual event: the Prospectors and Developers Association of Canada (PDAC) convention in Toronto. The four-day mash-up of frantic stock promotion and even more frantic alcohol consumption draws about 30,000 participants and captures the current mood of the junior mining sector.

Spirits are likely to be brighter than last year as a recent uptick in stock prices, equity financing and M&A activity has provided a jolt to the sector. However, the recovery is tenuous and hundreds of companies are still struggling to survive.

• Hot exploration stories: There are always a few companies with exciting discoveries that draw a disproportionate amount of attention. This year, the group could include firms with advanced discoveries like Probe Mines Ltd. and Fission Uranium Corp., and early-stage plays like NexGen Energy Ltd. and Falco Pacific Resource Group Inc.

• Commodity outlook: You won’t hear anyone use the dreaded words “China Supercycle” after the poor performance of metal prices over the last three years (unless they’re joking). But underlying demand fundamentals still appear healthy, and speakers are likely to focus on that.

• M&A activity: There has been a healthy pick-up in M&A activity recently, including large hostile bids for Osisko Mining Corp. and Augusta Resource Corp. There will be plenty of speculation about whether the dealmaking will continue, and who the next target could be if it does. The role of private equity will also be in focus.

• Financing: While a growing number of juniors have tapped the capital markets in recent weeks, most of them are still shut out of basic equity and debt deals. Alternative financing options are often a popular topic at PDAC, and this year will be no different.

• Ring of Fire: PDAC takes place in Ontario, which means the giant “Ring of Fire” discovery in the province’s far north is always under scrutiny. Numerous speakers are scheduled to discuss it. But after Cliffs Natural Resources Inc. halted work on its Ring of Fire project last year, the question is whether anyone will want to listen. Development does not appear to be any more imminent than it was five years ago.

• Gold bugs: This past year was a humbling one for Rick Rule and company. They are certain the next bull market is already underway, though convincing investors may not be so easy. (Of course, they are mainly preaching to the converted at PDAC.)

• The PDAC Curse: Ah, the famous PDAC Curse. This refers to the phenomenon of junior mining stocks rising in the weeks leading up to the conference, and then plummeting right after it ends. It does not happen every year, but does happen frequently enough to elicit plenty of nervous jokes at the convention. The recent uptick in junior mining equities suggests that 2014 could be a prime candidate for the curse.

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