Hard-hit mining sector puts on brave face at annual conference – by Peter Koven (National Post – March 4, 2013)

The National Post is Canada’s second largest national paper.

TORONTO — Amid an extremely difficult period for the global mining industry, the Prospectors and Developers Association of Canada conference remains a source of cautious optimism for shell-shocked companies and investors.

The industry’s largest event, expected to draw more than 30,000 people, kicked off Sunday in Toronto. And while none of the speakers pretended that these are pleasant times for mining companies, they tried to remind everyone that some positive fundamentals are still in place.

“There’s still a long way to go in China’s urbanization story,” said Duncan Hobbs, a London-based analyst with Macquarie Group. He added that roughly 300 million Chinese people are expected to move to cities in the decades ahead, implying strong long-term demand for commodities.

But it doesn’t help mining companies right now. They are suffering from numerous wounds, some of which are self-inflicted. Senior companies have been forced to write down assets by tens of billions of dollars over the last year after they paid too much to acquire them. Cost inflation continues to be a huge industry concern, while metal prices are struggling amid an uncertain global economy.

The PDAC conference is mostly populated by junior companies, and they are doing much worse than the seniors. Raising capital has become almost impossible for smaller juniors, as investors have little-to-no interest in financing early-stage exploration. Many juniors have disappeared or are struggling just to survive. As usual, the PDAC trade show is full of companies that did not exist a couple of years ago, or likely won’t by next year.

“We had a tough year, and this period of toughness will continue,” Montreal-based independent analyst Terry Ortslan told the audience. He cited lack of money, geopolitical and operating issues, and other challenges.

For the rest of this article, please go to the National Post website: http://business.financialpost.com/2013/03/03/hard-hit-mining-sector-puts-on-brave-face-at-annual-conference/