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Diggers and Dealers Mining Forum focuses on growth, exploration and acquisitions

Presenters at this year’s Diggers and Dealers Mining Forum in Kalgoorlie in the Western Australian Goldfields looked at the question of growth, and whether to focus on acquiring new projects or explore to increase production.

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Kalgoorlie-Boulder is to host future Diggers and Dealers mining forums

Diggers and Dealers Mining Forum 2018 is done and dusted, but what were some highlights? We take a look.

Diggers chairman Nick Giorgetta opened the forum on the Monday after predicting a buoyant event in an interview with Proactive Investors.

Giorgetta said the event had proved buoyant and had matured into an international, professional event.

“There’s a lot of deals being made,” he said on Wednesday.

READ: Diggers and Dealers 2018 a ‘buoyant’ and ‘serious, relevant conference’ not about skimpies

The chairman acknowledged a number of companies had attracted buzz.

Giorgetta said: “There’s the standard companies that always perform well, companies like Evolution (Mining), Northern Star (Resources) because they come up with good results, good cash profits, good … reserves.

“Then there’s the emerging ones, that are really going to become the next line of producers – lithium, a few cobalt, just the companies that are not so much junior explorer but the would-be producer …they are popular.”

Former Portugal prime minister José Manuel Barroso

Keynote speaker and former Portugal prime minister José Manuel Barroso.

Barroso warns of protectionism

Giorgetta introduced keynote speaker José Manuel Barroso on Monday, a former prime minister of Portugal and ex-president of the European Commission.

Barroso said: “All of the advanced economies are giving a positive contribution to global growth.

“But there are some risks, and the more serious risk I see to global growth is the rise of protectionism.

“When I say protectionism I don't only mean the rise in tariffs and counter-tariffs, I also mean restrictions to cross-border investments and other restrictive measures.”

The Goldman Sachs International chairman believes protectionist government policies could hamper business sentiment and investment — with the US’s trade tariff protections and the UK’s Brexit momentum being two example of restrictive, anti-free-trade policies that could hamper the economic growth of global economies.

Acquire or explore?

One of the key questions big miners addressed was whether they were in to pick up new projects or explore for opportunities themselves.

Another question was whether miners should embrace the push to go big or offload at key times during the market cycle.

Northern Star Resources (ASX:NST) answer to the first question is both: acquire and explore.

The $4.57 billion company revealed it had poured $60 million into its budget for the 2018-19 financial year, ahead of Diggers.

Its goal is to turn a big chunk of 15.9 million ounces of resources into reserves to underpin its growth.

The company is hoping the strategy will deliver a similar outcome to its FY18 strategy, and result in guidance that tops the current estimate of 600,000 to 640,000 ounces a year and costs of $1,025-1,125 an ounce.

But the major is also on the hunt for tier 1 assets in tier 1 countries, a quest some critiqued.

READ: Diggers and Dealers Mining Forum outlook ‘optimistic’ as upturn continues

Resolute Mining Limited’s (ASX: RSG) John Welborn flagged his company was still interested in African opportunities and highlighted Sudan as a potential jurisdiction for investment.

He flagged the company was experiencing a major gold rush and 300,000 ounce a year assets were more likely to be found in African than mature jurisdictions.

Fortescue Metals Group (ASX:FMG) chief executive Elizabeth Gaines acknowledged the company’s recent acquisition activity in investment Atlas Iron Ltd (ASX:AGO) but indicated iron ore exploration in the Pilbara region and the company’s core iron ore business were its focuses going forward.

The Western Australian heavyweight sold-down a 19.9% stake in Atlas to 11.37% during Diggers.

Newcrest Mining (ASX:NCM) general manager exploration Fraser MacCorquodale declared the company “open for business in the exploration space”.

He pitched a pledge at juniors, saying: “If your project is stalled for mining or processing reasons, come and talk to us.”

"We're actively looking for new partners."

Kalgoorlie's Exchange Hotel

Kalgoorlie-Boulder's Exchange Hotel.

Grow or resist?

Evolution Mining (ASX:EVN) executive chairman Jake Klein indicated the $4.96 billion company was resisting a push to become very large.

He said the company was focused on capping the number of projects it managed at eight, believing gold companies weren’t scalable into big organisations with a large portfolio of assets in multiple jurisdictions.

Klein said: “This means a strong focus and discipline on upgrading the asset base by selling lower quality assets in the upturn and acquiring higher quality assets in the downturn.

“We have set ourselves a discipline of having no more than 6-8 assets reflecting the reality that selling assets is as important as buying them.”

Evolution currently has six projects and previously divested Edna May and Pajingo projects and picked up the Cowal and Mungari projects and a stake in Ernest Henry.

Diggers delegates typically take in presentations over a three-day period.

Diggers and dealers in the spotlight​

Award winners were once again recognised at the WesTrac Gala Dinner held on the last day of the forum.

Ausdrill Limited (ASX:ASL) founder and now former managing director Ron Sayers received the annual G.J. Stokes Memorial Award.

The Digger Award accolade went to Kirkland Lake Gold (ASX:KLA) (NYSE:KL) (FRA:NGDA) (TSE:KL) while Kidman Resources Limited (ASX:KDR) (FRA:6KR) (OTCMKTS:KDDRF) claimed Dealer Award and Metro Mining Ltd (ASX:MMI) (FRA:6ME) took Best Emerging Company.

Seven West Media Ltd (ASX:SWM) (FRA:WA7) WestBusiness resources reporter Stuart McKinnon meanwhile claimed the Media Award for his coverage in state newspaper The West Australian.

Western Australian plays on the up

Deloitte Touche Tohmatsu Limited launched its Deloitte 2018 Deloitte WA Index Special Edition at Diggers, highlighting a 26.8% growth in the value of Western Australia-based companies listed on the Australian Securities Exchange during the 2018 financial year.

The kick-up in market capitalisations put their collective closing value on June 30 at $193.5 billion value — the highest sum since May 2011.

Report author Dave Andrews wrote: “The ‘let’s just get on with it’ response this year has allowed many Western Australian companies to prosper.

“Battery metals, particularly nickel, cobalt and copper, and rare earths showed strong momentum on the excitement surrounding battery storage demand, the expanding electric vehicle (EV) market, renewables, and our hunger for more and more consumer technology.”

Data-driven earthmover renter Emeco Holdings Limited (ASX:EHL) (FRA:E3A) increased market capitalisation by $860 million or 341% to $1.113 billion while Lynas Corporation Ltd (ASX:LYC) (FRA:LYI) (OTCMKTS:LYSCF) (OTCMKTS:LYSDY) added $1.164 billion or 302% to end June 30 with a $1.55 billion market cap as Pilbara Minerals Limited (ASX:PLS) (FRA:PLR) (OTCMKTS PILBF).

The three companies were the top market cap movers in Deloitte’s WA Index top 20.

Within the WA Index top 100 movers, the three companies that had the biggest percentage gains in market cap values were: Tungsten Mining NL (ASX:TGN) which added $310 million or 3,141% to end with $320 milllion, Australian Mines Limited (ASX:AUZ) which gained $206 million or 643% to end with $238 million; and European Lithium Limited (ASX:EUR) which added $95 million or 469% to end at $115 million.

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