Exploration Leaders On Precious Metals Stocks: Remember That Quality Is Important
The recent Sprott Natural Resource Symposium in Vancouver assembled some of the most accomplished builders & explorers in the natural resource space.
Following the conference, a few industry leaders were kind enough to share their thoughts on the current state of the resource market with Sprott’s Thoughts readers.
John-Mark Staude, Brent Cook, Joe Mazumdar, and Morgan Poliquin explain where the resource industry has been, where it is now, and where it is headed.
Brent Cook and Joe Mazumdar of Exploration Insights explain that the [Sprott Junior Gold Mining Index] has jumped over 100% since the start of the year. While such a recovery was expected after years of veritable sector depression, there are still deep inefficiencies in the public junior and mid-tier gold mining space. The good and the bad companies have risen in price, lock step, a phenomenon which will not continue indefinitely.
As more capital pours into the space, Brent expects high quality companies to continue to rise higher over time, while lower-quality competitors experience muted relative performance.
Speaking toward lower-quality gold deposits, Joe shared a similar tone—noting that major producers have lots of uneconomic ounces in their portfolios, and are more likely to develop them (as opposed to acquiring), should those ounces ever become economic.
John-Mark Staude of Riverside Resources, provides a prospect generator operator’s point of view. Despite recent market optimism, he reminds us that the struggle of making a new resource-deposit discovery is still very real. Precious metal exploration operators therefore, feel real caution, despite the market recovering from the January, 2016 bottom.
Morgan Poliquin, who runs Almaden Minerals and Almadex Minerals, tells us of a stunning change in investor sentiment over the last year: In 2015, investors commonly asked him, “How much cash is left in the treasury? Who can you fire? How can you further reduce costs?”
Today, in contrast, Morgan notes the marketplace generates such questions as: “How many exploration drill rigs do you have running? Can you buy [and activate] more rigs?”
A vital message shared from this exploration panel is: Beware the desire for instant gratification—most new investors in the exploration space have no idea what it takes to make an economic discovery.
On the heels of the Sprott Natural Resource Symposium, this interview offers a salient review of the space from market insiders, a review from which all natural resource investors can benefit.
For a full compendium of audio material from the Sprott Natural Resource Symposium, please consider our Sprott Conference MP3 Package—which includes presentations by Rick Rule, Ross Beaty, Bob Quartermain, Rob McEwen, and many others.
This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
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