Sentiment In The Mining Sector Making Baby Steps - Beacon Securities
(Kitco News) - There appears to be light at the end of the mining sector’s very long and very dark tunnel, according to one research firm.
In an interview with Kitco News on the sidelines of the Mines and Money conference in Toronto, Michael Curran, managing director with Beacon Securities, said that his firm is starting to see improving sentiment within the mining sector.
“We are seeing juniors getting rewarded for good exploration news. We are seeing trading volume picking up for mid-tier and senior producers,” he said. “These are positive baby steps for the mining sector.”
Curran said that helping build excitement in the mining space is the recent merger announcement between Barrick Gold Corp and Randgold, which would create the largest gold mining company in the world; however, he also added that the market needs to see higher prices.
Curran’s comments came just before gold prices hit a three-month high. While the yellow metal has backed off its recent highs, the market is still holding on to most of its gains. December gold futures last traded at $1,231.40 an ounce, down 0.50% on the day
Curran added that while he doesn’t know the timing of the next big upswing, his firm is confident that at least a bottom is in. “I am convinced that at the very least we are off the bottom and it’s only a matter of time before we see higher prices.”
Although Beacon Security has exposure across the mining spectrum, Curran said that the firm traditionally likes the junior producer space. That sector has some of the best growth potential with the lowest risk.
One company Curran said he likes is Atlantic Gold, which is expected to produce between 82,000-90,000 ounces of gold at its mine in Nova Scotia.
“Junior producers who can move into the mid-tier give you the double whammy of either being revalued as a larger producer or you become an attractive takeover target,” he said.
One interesting theme at the Mines and Money conference was the impact other sectors like cannabis or cryptocurrencies are having on the mining sector. Curran was part of a panel discussion that touched on this theme.
Curran told Kitco News that the mining sector has nothing to fear from the marijuana sector, adding that the money being made from rallying pot stocks will eventually be good for the yellow metal and the mining sector.
“The marijuana scene is going to look a lot different twelve months from now,” he said. “I think we are going to eventually see a rotation back into the mining sector.”