Brian Sylvester of The Mining Report - Mon, Mar 2, 2015

PDAC Kicks off with Bold Predictions

The annual conference of the Prospectors and Developers Association of Canada (PDAC) is under way in Toronto and the mood on the floor and in the Investors Exchange is, as one might expect, cautiously hopeful, even if about a dozen booth spaces are unoccupied.

PDAC Convention

On Sunday, newsletter writers provided their boldest predictions and insights. Perhaps the most noteworthy call was Kaiser Research Online's John Kaiser pointing to a developing shortage in scandium. Scandium is used primarily to strengthen aluminum used to build fighter jets and passenger planes. When you weld scandium, Kaiser explained, the joints are as strong as the material itself. It can also be used in 3-D printing. Kaiser predicted we are going to see scandium, a metal nobody ever heard of because it doesn't concentrate well, undergo the same revolution as niobium did in the 1950s; niobium is now a $2.5-3 billion ($2.5-3B) market. Scandium is now a $25-40 million ($25-40M) market, Kaiser said. He listed three main options for scandium exposure: Scandium International Mining Corp. (SCY:TSX); Clean TeQ Holdings Ltd. (CLQ:ASX); and Platina Resources Ltd. (PGM:ASX).

On Sunday afternoon, PDAC delegates packed the John Bassett Theatre to listen to Ivanhoe Mines Ltd. (IVN:TSX) Executive Chairman Robert Friedland deliver a memorable keynote address about urbanization, and the relentless need for copper and platinum group metals in these settings. He said one small car uses roughly 30 grams of platinum in a catalytic converter, and 400M vehicles are expected to be on China's roads by 2030. There are 90M currently.

Copper is used heavily in urban infrastructure and in cars, Friedland said, especially electric cars, where 70% of a lithium-ion battery is copper. He called urbanization the most profound phenomenon in the history of our species, noting that two-thirds of the world's population will be living in cities by 2050; about 54% already are.

Friedland and his Ivanhoe Mines team will receive the PDAC's Thayer Lindsley Award for international mineral discoveries for the massive Kamoa copper deposit in the Democratic Republic of the Congo. Ivanhoe won the same award in 2004 for its discovery of the monolithic Oyu Tolgoi copper-gold deposit in Mongolia.

Before the conference, Toronto-based Red Cloud Mining hosted an investor event featuring 18 juniors, up from 15 at the October showcase. Hosted at the Fairmont Royal York Hotel in Toronto, the meeting is akin to speed-dating for mining investors and analysts. CEOs pitch up to a dozen people at a time in small conference rooms. That gives investors and industry people a chance to meet management and ask questions. About 250 people attended, roughly double last year's number.

Presenters included Avnel Gold Mining Ltd. (AVK.TSX); Abitibi Royalties Inc. (RZZ:TSX.V), Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX); Claude Resources Inc., (CRJ:TSX), Excellon Resources Inc. (EXN:TSX; EXLLF:OTCPK), Integra Gold Corp. (ICG:TSX.V; ICGQF:OTCQX), Kootenay Silver Inc. (KTN:TSX.V), Kirkland Lake Gold Inc. (KGI:TSX), Klondex Mines Ltd. (KDX:TSX; KLNDF:OTCBB), Lake Shore Gold Corp. (LSG:TSX), Richmont Mines Inc. (RIC:TSX; RIC:NYSE.MKT), St Andrew Goldfields Ltd. (SAS:TSX), Stornoway Diamond Corp. (SWY:TSX); Teranga Gold Corp. (TGZ:TSX; TGZ:ASX), Wellgreen Platinum Ltd. (WG:TSX; WGPLF:OTCPK), Western Copper and Gold Corp. (WRN:TSX; WRN:NYSE.MKT), Victoria Gold Corp. (VIT:TSX.V); and Victory Nickel Inc. (NI:TSX).

A couple of the presenters were recent industry award winners. Stornoway Diamond President and CEO Matt Manson won the 2015 Prospectors and Developers Association of Canada's Viola R. MacMillan Award after Manson raised almost $1B to develop the Renard diamond mine in north-central Québec. For the second straight year, Balmoral Resources President and CEO Darin Wagner accepted the Prospector of the Year Award from the Association Minière du Québec (AMQ) for Balmoral's Grasset nickel-PGE discovery in the Abitibi region. In 2013, Balmoral received the same AMQ award for its discovery of the Martiniere gold zone.

The event kicked off with a keynote address by BMO Capital Markets Vice President and Commodities Specialist Jessica Fung, who reminded that audience that there have been five recessionary periods over the previous 50 years and global copper demand dropped during each. However, unprecedented quantitative easing pulled global copper demand forward in the 2009 financial crisis, even amid the worst recession since the 1930s.

Fung noted that while copper demand in the U.S., Europe and Japan dropped by double digits in 2009, China's $590B stimulus package prompted a 38% pop in copper demand in a key copper-consuming region. So the world essentially borrowed its way to commodities consumption.

But that artificial demand growth meant that miners failed to cut supply, and BMO now forecasts a surplus copper market through 2018. Fung said the only answer is a supply-side response, owing to an ongoing lag in demand growth.

The lunchtime panel discussed the merits of regulated equity crowdfunding for mining. The concept had people listening, but many questions need to be answered. Panelist Oscar Jofre founded KoreConX, an online platform and portal builder. His company built and sold KlondikeStrike.com, the world's first equity crowdfunding portal for mining. "In order for this to work, you have to know how to make the crowd work for you. How are you selling your story?" Jofre asked. "There is a massive crowd out there looking to invest."

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