We are in for positive times

13 March 2018

Optimism was the general sentiment at this week’s RIU Explorers Conference which is in its 17th year. The event provides mining and exploration firms a place to garner investment and to share in best practices. With over 68 presentations across the three-day program many of the company’s leader’s shared their view that mining is experiencing an upturn and a return to investment in resource stocks.

Adam Myers, Partner, Corporate Services, BDO shared with a packed room a number of key indicators that he thought also signaled that there was going to be sustained growth and new opportunities emerging in the industry. Reflecting on some parallel conditions the industry faced in 1999 which was a period of more difficult conditions prior to the boom, he pointed out that mining activity is in fact higher than it has ever been. What differs is the level of construction which was extraordinary during the boom. Also, capital transactions are comparably higher than in 1999 putting it in a far better position in terms of access to capital. 

There was no talk of another ‘mining boom’, but an understanding that the industry is more likely to experience a period of sustained growth essentially supporting the ongoing urbanization of the developing countries of Africa and Asia. However, Myers pointed out that ultimately success of individual mining companies will come down to the experience and aptitude of management teams and their boards siting the success stories of Western Areas, Panoramic, Mincor, Sandfire and Independence Group who emerged during the 'dead' times.

Myers said it has been the busiest January in some time observing that companies are looking to gear up and consider acquisitions to give them capacity to deal with demand. Also adding that BDO recently acquired mid-tier M&A Tomkins Turner, an area that BDO sees positive growth opportunities.

Other indicators

  • Exploration expenditure saw a second successive increase in total spend at the end of September 2017, with similar results expected for December 2017.
  • Geologists are in high demand
  • IPO’s are back
  • M&A activity
  • Commodity prices comparatively higher
  • Record attendance at RIU