“I thought the mood was pretty buoyant this year. The gold and lithium miners and explorers were all happy, copper and zinc looks on the rise. But definitely an underrepresentation from nickel miners despite its likely role in batteries.
One major positive in my book was the renewed focus on exploration. NST’s FY17 focus has clearly paid off with their reserve growth. Others have done the same. Exploration budgets this year look strong and new discoveries can be expected.
Battery metals were also the talk of the town again this year. Lithium and cobalt look good, but the graphite sector remains wary over the potential impact of Syrah’s Balama production later this year.
A number of companies (SBM, RMS) stressed a desire for M&A transactions while WGX’s Peter Cook spoke of his successful policy of buying unloved assets and turning them around. However, larger companies (Gold Fields, NST and EVN) seem more focussed on organic growth.” Duncan Hughes, analyst, Bell Potter Securities
“The mid-tier gold producers continue attract majority of the focus, led by the likes of NST, RRL and SBM which as businesses are all absolutely humming. NST's resource and reserve update was a key highlight, and with the mine life issue now put to bed, the company is in great shape to pursue its next phase of growth (be it organic or inorganic).
Appetite for base metals exposure was definitely up on previous years. Standouts for us were MLX and FND which offer plenty of leverage to copper prices.
The electric vehicle thematic continues to gain momentum with more and more lithium, cobalt and graphite companies in attendance. Even nickel is beginning to catch a tailwind. With major carmakers continuing commitments towards EV progression, this isn't a bubble and it isn't going away.” Tim McCormack, analyst, Canaccord Genuity
“This year's conference felt very upbeat, and rightly so, given the state of the sector. Well-funded companies with very prospective geology will (in our view) experience further success in the coming years which could mark the start of the next era of mining in Australia as a growth pipeline exhausted through 2005-2012 is set for restocking. Those presenting a discovery last year tended to now be outlining a funded, ready to execute project and should be transitioning to a cash-generating producer by the time next year's event rolls around.” Paul Hissey, analyst, RBC Capital Markets
“The key themes were the nickel guys talking up nickel sulphate for use in batteries, as well as the gold expansion stories like RRL and NST. There was very little new information from the explorers with a big push on older stories like Artemis/Novo in the Pilbara and Explaurum at Narembeen. There was a big North American and European presence this year. The overseas funds are clearly underweight in Australian equities and are looking to increase their exposure. We also think there's similar interest from North American miners who might look to Australia for M&A.” James Wilson, mining and metals analyst, Argonaut
“For the first time in a while it seemed investors were more interested in good value mining stocks, rather than particular commodity. We think this is very positive suggesting renewed asset allocation into the sector, rather than just opportunistic money chasing commodity price movements. Exploration remains a big value driver, with increased expenditure over the last few years culminating in mine life growth for more sustainable operations and importantly new discoveries for further upside.” Mike Millikan, resources analyst, Hartleys
“We sensed an increased interest in consolidation or roll up plays where parties with key or strategic infrastructure seek to expand their influence. Capital remains difficult to secure and very selective and I felt this point was acutely recognised by the juniors present and therefore made for a very productive three days.” Liam Twigger, managing director, PCF Capital
"The gold sector is priced about the same as last year, but the outlook is so much stronger. Average mine lives up strongly courtesy of Northern Star and Saracen, costs remain competitive. So whilst last year I worried the strut of gold miners as they told us how great their businesses are could lead to a fall, this year they have shown us how great he businesses are and are getting on with it. This time last year, it was tough to find exploration if you're a micro cap. Still the case, but the industry has popped up as a funding party now. We have seen a range of equity deals between a miner and a junior and conversations I had with BDMs suggest that is something they will look to do more of." Hedley Widdup, investment manager, Lion Selection Group
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Separately, analysts from UBS surveyed 28 individuals (fund managers and corporates) at Diggers last week, with the top three 12-month picks among respondents being Dacian Gold, Breaker Resources and West African Resources.
Of the respondents, 68% believed the gold price was going higher, 79% were bullish on gold equities; 61% focused primarily on growth when considering gold equities; 55% believed current all-in sustaining costs could be maintained; 79% believed M&A activity in the gold sector would lift; and 79% expected a rise in exploration budgets.
