The most significant event in London’s mining calendar passed off this week with the usual combination of enthusiasm, cynicism and optimism about better times to come.
For all its detractors, Mines & Money remains unrivalled as the biggest and best attended mining investor conference in Europe, and it still probably ranks among the top five around the world in list that also includes PDAC, Indaba, the Denver Gold show, and the Vancouver Roundup.
If the list were to be expanded to ten, then Mines & Money’s other global shows might also feature alongside Africa Down Under and Hard Assets.
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Nevertheless, the event is changing. It was probably true to say this year that for the first time in a good long while the mood at Mines & Money was slightly out of sync with the sector as a whole.
Why was this?
Delegates were divided as to whether this year’s event was better or worse than last year’s. But that division in itself was telling, because there’s very little debate about the state of the sector as a whole: it would be hard to find anyone who doesn’t concede that 12 months on from December 2015, the mining industry is in far better shape.
That this shift in mood didn’t wholly translate onto the conference floor was probably partly due to budgetary lag. The sector may be picking up, but it takes time for people to get moving, for money to make it into bank accounts and then to be allocated, for work to take place on the ground that’s actually worthy of a promote.
The opposite effect was evident at the end of the last mining boom in 2008. Mines and Money conferences in subsequent years took a while really to highlight how much of a hit the industry had taken, as coffers remained full from the heady boom-time days and investors and directors clung to vain hopes that the downturn would be short-lived.
Such hopes do much to create the sector cycles that we have become so used to, and go some way towards insulating against wild gyrations and sudden peaks and troughs in the market. But the long recovery times are painful to live through: there were fewer booths at this year’s event than last, and fewer investors walking the floor.
Next year though, there will be more. Although the gold price has taken a sharp hit - contrary to most expectations - activity elsewhere in metals and mining has been picking up. As the conference opened, Chinese purchasing managers index (PMI) numbers showed continuing strength, by and large, in the Chinese economy.
European and US numbers also look good, and even the British economy looks in reasonable shape, despite tying one hand behind its back by the Brexit vote.
In a week that OPEC showed a degree of resolution that’s been lacking for several years now, there was talk of a similar, Kazakh-inspired, uranium cartel in the offing. One analyst at RFC Ambrian argued that informally the Kazakhs have been manipulating the uranium market for years. But it will be interesting to see if anything more formal develops.
Certainly, uranium pricing remains as idiosyncratic as ever, as the recent off-take deal signed by Berkeley Energia Limited (LON:BKY) has highlighted. Industry-watchers will know that the majority of uranium produced changes hands in off-take deals and that the spot price isn’t really a reflection of what buyers are willing to pay. Nonetheless, it was good to see Berkeley securing that premium, and raising money on the back of it.
Berkeley was much in evidence on the floor of the conference as its investor relations team and chief executive Paul Atherley worked the crowd. And the most interesting message to come out from this seasoned bunch of operators is that the generalists are back. When Berkeley brought US$30 mln into the kitty last month, it all came from generalists, according to Atherley.
That’s a real bellwether moment for the sector. Because it’s all very well propping up the sector with specialist mining money when times are bad. But for the good times really to start rolling again, interest needs to be much wider. Time was when the generalist funds were all over the place – and why not? – they were making money hand over fist like everybody else.
But come the bad times, only the specialists want to play and hardly anyone buys booths at Mines & Money because speculative interest is thin on the ground.
New mining IPOs are now in the offing too, with one or two preparing the ground for early 2017. If these can attract generalist money too, then the show really will be back on the road.