Industry Report – Metals and Mining Insights from the Precious Metals Summit

Monday, September 21, 2020

Minerals Industry Report

Insights from the Precious Metals Summit

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to end of report for Analyst Certification & Disclosures

• Precious Metals Summit goes virtual without missing a beat. The Precious Metals Summit went virtual this year and was held September 15-17. A diverse mix of business models including royalty companies, explorers, developers, and producers encompassed a broad range of precious and base metals. Jurisdiction attractiveness was a major point of differentiation highlighted in most presentations and panel discussions highlighted the importance for investors, during a precious metals bull market, to gauge the quality of managements since they are key to successful project identification and execution. A presentation by Stephen Moore, an advisor to President Trump, was interesting partly due to his veering from precious metals to make bullish comments on uranium and the potential for President Trump to issue an executive order declaring uranium a strategic resource for the United States. A panel featuring prominent buy-siders offered interesting insights ranging from their formulation of commodity price decks to what they look for in company presentations.
• Resurgence of exploration activity. With rising metals prices, increased exploration activity is evident, not just in the number of new exploration projects and the resurrection of some projects that might have been unprofitable at lower prices, but also increasing budgets for greenfield and brownfield exploration across the sector. The financing environment has improved markedly versus a year ago and generalist investors have returned to the sector.
• Resumption of M&A? A buyside panel highlighted that COVID-19 has made deal consummation difficult given that management teams are not as able to physically conduct site visits and due diligence meetings. As a result, M&A activity driven by acquirers’ needs to replenish reserves and/or achieve scale could accelerate once travel and physical interaction are less limited. More virtual discussions are likely taking place than meet the eye and, in some respects, the current environment may provide an opportunity for those able to make decisions without the usual protocols.
• Metals outlook remains constructive. While the equities of major mining companies were the first to benefit from rising prices, interest has filtered down to the junior mining universe. While the conference offered many views on the trajectory of precious metals prices, we believe the outlook remains constructive. Interest in metals linked to electrification and clean energy continues to build and there was plenty of discussion around copper, nickel, and palladium as beneficiaries of these themes.

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ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

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