Momentum Public Relations
Blog: February 28th
The premiere mining convention in the world is about to take place
in Toronto as the Prospectors and Developers Association of
Canada, PDAC, holds its annual convention from March 4-7, 2018.
As mining conventions go, PDAC attracts the largest numbers in
the world with more than 24,000 attendees expected this year.
PDAC has a domestic and international membership 7,500 strong.
Canadian mining companies operate in more than 100 countries
and no wonder. Canadians are good at mining, it is, not to put too
fine a point on it, one of our bedrock industries.
Internationally, mining companies like to list on the TSX because
after the C$ 6 billion Bre-X gold scandal of the 1990s and the
resulting mining sector slaughter, Canada cleaned up its regulatory
act and introduced NI 43-101, a mechanism that fosters
transparency in what can and cannot be said about a mining claim.
NI 43-101 helped eliminate fraud and boiler room scams in the
industry and made the Toronto exchange the place for listing and
raising capital. As a result more than half the mining companies in
the world list on the TSX and TSXV.
Last year almost 600,000 people worked in the Canadian mining
industry and the dollar value was in excess of C$60 billion. In
terms of the social fabric, Canadian mining employs more
Indigenous Canadians than any other industry.
Canadian governments recognize the importance of mining to the
Canadian economy. British Columbia has just announced a 12
member task force made up from the mining industry, Indigenous
community and labour to assess the health and vitality of the
industry in British Columbia and make proposals on how to
provide job security during commodity price fluctuations. In
British Columbia the mining industry generates 30,000 jobs and
generates C$6 billion. No small potatoes.
Mining is important to industry. Without iron ore, for instance, we
wouldn’t have steel. Moving forward, the next great industrial
revolution, from petroleum to renewable energy, won’t be able to
take place without the mining industry exploring for secure sources
of cobalt, lithium and graphite, new generation rechargeable
battery metals.
And then there is graphene, a material that is refined from graphite
which is much thinner and much stronger than steel. Among the
remarkable products that graphene can be used to produce is a
building coating that not only generates and supplies all the
electricity used to power a building but can also be used to change
the colour of a building. Imagine your office going from green
when it is open and to red when it is closed.
After going through an ugly period where financing was difficult
for majors and almost impossible for juniors, explorers and
developers are beginning to find project financing.
Last year, according to a story in the Globe and Mail’s February
27, 2018 issue, Brian Milner wrote that 20 mining companies went
public on Canadian exchanges and that roughly C$830 million was
raised for mining companies during 2017. Mining companies
provided more than half of the new issues introduced last year. The
amount invested, C$830 million, was the largest sum invested in
seven years.
At the moment, the mining industry seems poised for takeoff.
Commodity prices for base metals have improved. Major
companies that overspent on resources have largely put their
financial houses in order. Because prospecting and exploration
were put off during the recent past, mining companies are now
looking to find new reserves and build up project pipelines.
During mining’s recent awful bad day that went on for years,
prominent newsletter writers continuously wrote that it was time
for the industry to clean up its act and reduce the number of
zombie companies on the exchange.
A typical zombie company would be a junior that has a good story
and not much else, not the skill or the financing to advance any
project that it does hold. By listing on the exchange and raising
money it dilutes the capital available for juniors that have the skill
and ability to develop a project.
Doug Ramshaw, the President and CEO of Corex Gold, (TSXV:
CGE) believes that the industry needs more mergers like the one
which Corex is currently engaged in. Corex and Minera Alamos
are in the merger process in what Ramshaw describes as a perfect
fit.
The merged company will operate under the Minera Alamos name
for the time being and have three advanced stage gold projects
under development. One, Corex’s Santana property is expected to
be in full production by the end of the year producing 25-35,000
ounces of gold a year.
The resulting revenue will be used to help finance production at
Minera Alamos’ two advanced stage projects, Fortuna and
Guadelupe dos Reyes. All three projects will be processed using
low-capex heap leaching and Ramshaw estimates that when all
three projects are up and running annual production will hit
150,000 ounces of gold.
By using low cost heap leaching the mines will be profitable even
if the price of gold falls back. Merging the two companies will
produce one that has a market cap in the C$50 million range, one
that will be able to attract any financing it needs going forward.
If you feel like placing a bet on a junior gold exploration company
you may want to consider Alliance Mining, (TSXV: ALM) which
is starting to consolidate land claims in the Bissett gold camp in
southeastern Manitoba. The company already has three highly
prospective targets, including Packsack, a past producing gold
mine.
The best place to find a gold mine is next to another gold mine and
Packsack is four km away from Klondex’s True North Mine and
mill complex. More than 1.7 million ounces of gold have been
produced at the Bissett-Red Rice Lake gold camp.
On the other hand you may also be interested in investing in the
future. Equitorial Explorations, (TSXV: EXX) is currently
advancing three significant lithium properties.
You can also invest in the future of mining by investing in Albert
Mining, (TSXV: AIIM). Albert is named after Einstein because the
company has an AI powered exploration system called CARDS
which it using to find drill targets.
Canada’s mining industry is back and attracting smart money. If
you do invest remember to do your own due diligence, caveat
emptor.