John Kaiser is the high-profile editor of the Bottom- Fishing Report and he created a lot of interest as he pointed out that 500 companies in the junior mining field have less than $200,000 in the bank. And in this ugly market, are in danger of disappearing.
Interesting because finding cheap mining stocks was his specialty.
Fresh from the massive PDAC Conference, we ask him to turn on his crystal ball for the future and tell us what he sees of interest. We have a long and rambling conversation so we hope we have got this all right!
1. Kaiser points out that there was 527 booths at the massive PDAC Conference, the biggest mining show in the world this past week. There were over 30,000 people that showed up, but he said the mood was a bit of a touch of reality. Kaiser points out that 114 of those booths were on his list of the companies that have less than $200,000 in the bank and how will they be able to fund themselves in these tough markets and to survive
is very much in doubt.
This correction Kaiser suggests, will separate the weak from the strong and there won’t be many companies around shortly.
2. Most companies in the mining sector Kaiser suggests, are in metals with supplies roughly in demand with demand. It would take an event such as a sudden increase or decrease in world economies, to alter current metal prices. Mines are starting up all over the world he suggests, helped by the past decade of good commodity prices and will meet any increase in demand. He uses the example of nickel, and notes that new mines coming on stream in places like the Philippeans and Indonesia, will meet that demand. These are not necessarily countries known for being big players in the mining sector.
3. The big problem with so many miners and developers Kaiser suggests is that mining costs and building new mines is simply out of control. He suggests that is one of the big problems of the day and that yes, they are aware of it and one has to be, as an investor, aware of operating costs.
- In Canada’s crowded market, junior miners get the shaft (business.financialpost.com)
- Junior miners in survival mode, bracing for industry-wide culling (business.financialpost.com)