There was an interesting cross-section of the junior exploration and production industry represented at this week’s Mining Capital event, held at the Brewery on 3rd May.
In a sign that market appetite in London is finally beginning to return at all levels, punters packed out the room to hear exploration stories as well as those with established production, noting too that the explorers in general are now reasonably well funded.
That’s a marked contrast to the situation that pertained just two years ago, when exploration funding was almost impossible to find, and most juniors without production were running on what the sector terms euphemistically as “fumes.”
At the Mining Capital event though, there was an enthusiastic reception for Predictive Discovery Ltd (ASX:PDI), which has a gold exploration portfolio in Francophone West Africa, and for Canalaska Uranium (CVE:CVV), which has a uranium portfolio in Canada.
Tellingly perhaps, both are supported by larger partners on some of their projects. In the case of Canalaska, the leading light of the uranium sector, Cameco (TSE:CCO), is on board. And Cameco is joined by another luminary, Denison (TSE:DML).
In the case of Predictive Discovery, meanwhile, the most significant partner is Toro Gold, the privately-held West African gold producer backed by Adonis Pouroulis. Toro itself was little more than an exploration story four years ago, but succeeded in pouring its first gold earlier this year.
And in highlighting that news, Predictive’s Paul Roberts brought the attention of the Mining Capital audience to another emerging trend: the increasing amount of companies that are now bringing on new projects in West Africa. Whereas in 2017, the troubled Aureus, now Avesoro, was one of the only companies to make it into production in the region, this year there have been five already, and we’re only in May.
One was Toro’s Mako project. Others include mines owned by Perseus and Endeavour.
So what we are now beginning to see is activity happening at all levels in the junior sector, from grass roots exploration, as Paul Roberts and his Predictive team go out into the bush in Burkina Faso, right through to development and new and ongoing production.
On the development side, European Lithium (ASX:EUR), also a presenter at the Mining Capital event, is a case in point. The company boasts the most advanced lithium project in Europe, with a project situated on the doorsteps of potential markets, and not too far away from a production decision.
Only slightly further back in the development cycle is the fourth presenter at the Mining Capital event, Mkango Resources (LON:MKA).
Mkango is moving forward with economic studies at its Songwe rare earths project in Malawi, and expects to sell product into the burgeoning market for speciality metals that is growing up around the electric vehicle industry.
But of course, although there’s plenty of share price upside to be found in exploration stories, the long-term goal of all of these companies is for their respective projects to be put into production. And an example of a company that has successfully and recently made the transition from exploration and development to production was also on show at the event in the shape of Ariana Resources (LON:AAU).
Ariana has not long since initiated production from its Red Rabbit project in Turkey. This is going well, and there’s likely to be more to come, as the company continues to work up new ground and to fine tune existing operations.
Both these companies produce of the order of 80,000 ounces of gold per year, and both have ambitions to expand the scale of their operations. Anglo Asian’s Bill Morgan was at pains to point out that while there has been significant share price appreciation in recent months, actually this really only equates to the company’s elimination of its debt pile.
Mark Learmonth of Caledonia, meanwhile, pointed out that while shares in his company too had risen, the overall earnings multiple still stands at a modest five times. Caledonia pays a dividend too, which is a relative rarity in mining.
So all told, there’s still time to get in at the ground floor as the mining cycle in London starts on its new upswing. There should be plenty more to come.