Miners Throw a Party in Toronto but Hurdles Still Remain in Many Mining Segments

This year’s Prospectors & Developers Association of Canada (PDAC) Convention, which took place early in the week in Toronto, displayed a higher activity than several previous conventions. The miners were upbeat as global exploration spending rose 15% last year while S&P Global Market Intelligence expects that it will grow by up to 20% this year (mining.com). Numerous investors, who came to this world-biggest mining convention, were looking for good deals in the mining sector, as improving global economic outlook has sparked interest in certain segments of the commodity sector. 

In particular, China’s commitment to electric vehicles helped raise the price of lithium by more than 40% and almost triple the price of cobalt since early 2017.

 

Source: tradingeconomics.com

Base metals has been one of the leading segments in the metals and mining sector – where copper and zinc have posted 50%-100% price growth rates over the past couple of years.

Bloomberg Industrial Metals Subindex

 Source: bloomberg.com 

Miners and investors are also anticipating increased activity in other segments. For instance, many expect that gold will eventually break through the USD 1,400 per ounce level, which it last posted back in 2013. This could trigger heightened gold exploration and production. 

Other metals, like uranium, have shown much weaker performance. The price of uranium is currently close to its 13-year lows while there have been a lot of expectations for a price revival in the past several months amid shrinking global output of the metal.

Source: cameco.com

The S&P/TSX Venture Composite Index, which is heavily based on early- stage mineral companies, so far is not showing as much enthusiasm as individual miners and venture investors. The index is down about 2% year-to-date.

Source: tmxmoney.com

But the junior mining sector is hungry for growth after years of decline and some are even suggesting that a multi-year metal price boom is on the horizon.

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