Some optimism is starting to creep back into the mining sector — but not much. Sentiment is fairly muted so far at the Prospectors and Developers Association of Canada (PDAC) conference, which kicked off Sunday in Toronto. The conference, which is the world’s biggest gathering of mining professionals, serves as a good barometer for the state of the industry, and this year’s show is a reminder that things are pretty grim.
he commodity boom is long over, and metal prices as a whole remain extremely weak due to oversupply and concerns about China’s economy. Most junior miners can’t raise a penny of capital, and share prices are, in many cases, lower than they were before metal prices started to rise in the early 2000s.
“We, as an industry, wasted the opportunity offered by the largest and biggest boom in commodity prices,” Mark Bristow, the chief executive of Randgold Resources Ltd., told the audience, citing the industry’s very poor spending decisions and billions of dollars of writedowns.
Miners are an upbeat group by nature, and there are a couple of glimmers of hope for the sector that were absent until very recently. Metal prices have shown signs of life in the last several weeks, and gold in particular has been hot, jumping back above US$1,250 an ounce. A handful of gold companies have been able to raise capital this year, and share prices in the gold space are up sharply from their lows last year.
When commodities rebounded in 2009 following the global financial crisis, gold was the first one to move up. Companies at the PDAC show are hopeful that history will repeat itself and other metals will soon follow.
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