It Doesn't Feel Like It But Mining Sector Is Alive - Chad Williams
(Kitco News) - While 2018 has not been a positive year for the mining sector, the rumors of its demise are greatly exaggerated, according to one financing executive.
Chad Williams, president of Red Cloud Klondike Strike
Although the sector has struggled to find investment capital, the Canadian mining sector continues to dominate deal flow, raising the most money out of any other sector in Canada, Chad Williams, president of Red Cloud Klondike Strike, said in a presentation Xplor, a Quebec annual mining conference. He also noted that so far this year the mining sector has seen deals valued at $5 billion.
“The value of the deals made in the mining space far outstrip what we’ve seen in the marijuana market,” he said. “Even though it has been a difficult year, companies are making money even in a bear market,. There is hope going forward”
However, Williams added that the downside for the mining sector is that most of the financing is coming from other mining companies. Generalist investors are still avoiding the marketplace. Business-to-Business capital in the mining sector increased 78% from the previous year.
Another issue William raised is that the deals are being spread out among small companies that don’t have viable projects.
“What we lack in value we make up for in the sheer number of deals. There are something like 2,000 mining companies out there fighting for capital. What would this sector look like if there were only 200 companies getting that capital, even then maybe 200 is too many,” he said.
Despite the headwinds in the sector, Williams said that he is optimistic that capital will eventually return to the market. And it could come from an unlikely sector: cannabis.
“We have seen the creation of a new set of investors, young people who have made money in marijuana stocks,” he said. “That has created an appetite for risk that I expect the mining sector will eventually fill.”