2017: Making Mining Great Again

THE CONFERENCE CALLER: The overall sentiment on the first day of the RIU Exploration Conference 2017 in Fremantle was positive with delegates reflecting the current shift in market sentiment. By Jacinta Payne

That shift, according to Patersons Securities head of research Rob Brierly, is a positive one, with the cyclic nature of the resources market broadly starting to look up again.

Brierley told the largest opening day crowd the Explorers Conference in the past few years that the sector has started off strong in 2017. 

The last five years hit smaller resource companies harder than the larger companies at the big end of town.

Brierley said he is hopeful for 2017, which has already shown a, “remarkable comeback,” with junior resource companies is starting to outperform larger resource.

Commodities are contributing to the rise in confidence – in particular iron ore, which has staged a recovery of late to be sitting at US$87 the night before the conference.

Not too bad considering its position at the same time last year was a price of US$51 per tonne.

“(This graph) highlights the unpredictability of the commodity price, and that we are really hostage to a large consumer, and that consumer is China,” Brierley said.

Following Brierly to the podium, ANZ senior commodity economist Daniel Hynes said stabilisation in the Chinese market has led to a broad recovery of the global market.

He said there has been a boost to housing and infrastructure in China, from which steel made a positive shift in 2016.

Brierley said gold has, “lost its lustre”, over the last twelve months, but figures show gold is at US$1236 per ounce up from US$1222 per ounce last year, after a decline in late 2016.

Hynes expressed concerns over the United States beginning to implement US preference policies and the potential for a global trade war and price drops.

Base metals are recovering, but are still lagging in the 10-year outlook, however, Brierley predicts a potential copper deficit coming, “sooner than people think,” despite BHP Billiton’s expectation for balance until 2020.

Hynes also predicts a copper deficit in the near future, with disruptions in the production lines causing inventories to be relatively low.

The market may be starting to look up, but things still look shaky in the 5B submissions.

A little over half the 606 ASX-listed resources companies reporting held less than $1 million net cash as of end of December 2016, with less than 10 per cent reporting more than $10 million.

“I don’t know what they intend to do with less than a million dollars, but it’s not going to be a lot,” Brierley said.

“Everybody knows that exploration costs money. Its risk capital and it needs to be spent, otherwise a company will remain dormant.”

There is optimism in the air, with many conference delegates agreeing this year’s conference to be is busier and more positive than last year.

Cassini Resources managing director Richard Bevan told The Resources Roadhouse he thought the conference is busier and more, “buoyant”, than last year.

Blackham Resources managing director Bryan Dixon said he was happy there is more activity and funding back in the gold sector.

“The general market has been in fear mode for quite a while and people are back looking for opportunities again,” Dixon said.

Conference organizer, Vertical Events managing director Stewart McDonald was pleased with the turn out.

“Attendance is probably up by 20 per cent in terms of numbers, but up by a million percent in terms of attitude,” he said.

“Everyone’s positive.

“Last year was okay, because they’d just been through 2015 which was very, very bad.