Tracking Junior Miners - Why Are they Underperforming? in Mining and Precious Metals Posted March 11, 2013 · Report reply Thoughts on PDAC 2013 · Crowd was very good – just as many as last year. I believe that the conference organizers did a better job of handling the crowd because it seemed like lines (such as coat check, food lines, etc.) were much shorter this year. · I had expected to see some empty booths due to junior explorecos not being able to make the trip. However, I was wrong. All the booths were full. There is a good chance the PDAC is the last gasp for many of them as it was noted that over 30 companies exhibiting had less than $200k working capital left. · Exploration activity seems to be slowing with the downturn in finance for the sector. There seemed to be many more junior Geos looking for a job than I remember from previous years. · I met multiple people who were “First Nations Representatives” (consultants/mediators, etc) of one sort or another. This seems to be turning into a big industry. Not sure what to make of that. · Toronto is still cold as hell in early March and I don’t understand why PDAC doesn’t move this convention to Cancun or somewhere warm. I did learn why the conference is held at this time of year. In the old days the explorers up North could work in winter (water was frozen) or summer (via boat) but not when the ice was breaking up in early March. Hence – they had nothing better to do then go to the conference. · The big “World’s biggest mining party” on Tuesday night (sponsored by Renvest this year) was even more crowded than last year. The Dave Murphy band is awesome, but they’re going to have to do something to reduce the crowd next year (or move it out of the Royal York). Keeping the students out would be a good start, I think. · I attended several of the newsletter writer presentations. I had kept some notes but unfortunately lost them when someone picked up my binder (probably by mistake) during the party on Tuesday night. Here are the ones I remember: o Ian McAvity – believes we’re only weeks or maybe days from a bottom o Taylor Thoen – this was a new speaker this year. Apparently she is a tv personality (not a gold/investing expert) in Canada and does a lot of CEO interviews. I enjoyed her presentation and remember that her website is: www.ceoclips.com. Also she was better looking than all the other newsletter writers combined. o Chris Berry and at least one other speaker were bullish on uranium o Keith Schaefer was bullish on oil refineries along the Mississippi River corridor. o Rick Rule – was in typical form (no powerpoint needed). His thesis was that the good stuff is cheap enough even though the sector as a whole will still trend down for a while. He likes PGMs (i.e. Sprott’s new physical fund) and gave a plug to Friedland’s new promo Ivanplats (Friedland apparently gave a presentation at PDAC but I missed it unfortunately). · Here are notes from either presentations or conversations with companies: o Hecla announced its bid for Aurizon on Monday morning and Phil Baker gave his presentation that morning. Supposedly the offer is accretive on all the metrics except for EPS which won’t turn accretive till 2014. There was (supposedly) no quid-pro-quo with respect to keeping Aurizon management or Board members in the merged company. I didn’t see his presentation but apparently Alamos CEO McClusky slammed Hecla pretty hard afterward. o Midas Gold – this project looks interesting but I’m worried it will take a long time to get permitted o Silvercrest – this story keeps getting better and better. The expansion of Santa Elena is underway and an updated resource estimate & production schedule will be forthcoming. I was originally skeptical about the low grade La Joya project but I’m now confident that they have a plan to develop it successfully. Metallurgy still needs to be confirmed, I think. Production should double for Silvercrest with the Santa Elena expansion and then double again when La Joya is brought online. I already have a large position (due to ~500% capital gains over the past years) or I’d be buying more of this one. o Sandstorm Gold – Nolan Watson promised he would never do another deal similar to the Entrée/Mongolian deal due to significant shareholder complaints. o Continental Gold – I first became aware of this Columbian project at last year’s PDAC but didn’t buy in as I thought the market cap was too high. The price has come off some since then but I think it’s still in that “boring” part of the construction/development phase where the stock price continues to drift down. The project itself is very high grade and they are spending a lot of money developing it right now. This is one to keep an eye on for next year. o Rob McEwen/MUX – still promoting his S&P 500 by 2015 goal. I don’t think he’s going to achieve that in the timeframe left with no better assets then what he has. Still trying to sell the big copper project. Will need more financing for the gold projects this year. Not interested in a stream deal and was critical of mining companies who resort to this type of financing. o Rambler – their production dropped somewhat early in the year due to some equipment problems. The solution is not yet in place but shouldn’t be very expensive. The loan with Sprott will be renewed/refinanced as they can’t pay it off yet. The hot IR chick from last year is no longer with them (big disappointment for me.) That’s about all I’ve got time to write up.