Resource World Magazine

J U N E / J U L Y 2 0 1 9 www.resourceworld.com 5 Editor's Comments Ellsworth Dickson Ellsworth Dickson, Editor-in-Chief Email: editor@resourceworld.com T: 604 484 3800 | 1 877 484 3800 The Alpala deposit mineral resource estimate (MRE*) reports 2.05 billion tons at 0.60% copper equivalent ("CuEq") (8.4 Mt Cu, 19.4 Moz Au) Indicated (with a cut-off grade of 0.2% CuEq), plus 900 Mt @ 0.35% CuEq (2.5 Mt Cu, 3.8 Moz Au) Inferred (at 0.2% CuEq cut-off ), including a high-grade core of 400 Mt @ 1.49% CuEq (3.6 Mt Cu, 11.9 Moz Au) Indicated 15% of the Cascabel Cu-Au Project in Ecuador financed to completion of a feasibility study plus 9.2% of the shares of JV partner SolGold Plc (total 22.8% direct and indirect interest in Cascabel) 3 projects being funded by partners (Bramaderos in Ecuador with Sunstone Metals; Miocene in Chile & Caña Brava in Ecuador with Newcrest) 2 more 100% drill ready projects in Ecuador Strategic Exploration Alliance Agreement with Ecuadorian State Mining Co. ENAMI EP – 9 concessions near Cascabel * See Nov. 20, 2018 news release and Technical Report filed Jan. 3, 2019 at www.sedar.com. Mr. Martin Pittuck, MSc, CEng., MIMMM, is responsible for the updated MRE and is an "independent qualified person" as defined in NI 43-101. W hile a few junior mining stocks have been propelled skyward upon issuing great exploration results, the TSX Venture Exchange Index has been moving sideways since early February – reflecting a general disinterest in junior miners. This follows an 11% decline in the S&P/TSX Composite Metals and Mining Index in Q4 2018. However, some good news is now peaking over the horizon. The Ernst & Young LLP Canadian Mining Eye Index has reversed direction from a 2% decline in Q4 2018 to a 5% uptick in Q1 2019. The Index tracks the perfor - mance of 100 Toronto Stock Exchange and TSX Venture Exchange mid-tier and junior mining companies. There are probably a number of reasons for the turnaround but, as Ernst & Young reported, some of the reasons could be the increase in both production and exploration spending in the gold sector in Canada and globally. Canada's gold output is expected to grow by 6% in 2019. Over at PwC Canada, Dean Braunsteiner, National Mining Leader, PwC Canada, remarked, "Last year marked a turning point for the mining industry, and 2019 brings even more pos - sibilities for companies to position themselves for the next stage of growth." He added, "While recent mergers were a sign of a wave of con- solidation that will help companies better compete for capital, we can expect even more M&A activity in the near future. That creates a cascading effect of further deals as companies sell off non-core assets, which brings new opportunities for management teams to build the next big Canadian mining company." These are rather subtle clues that could point to rejuvenation in junior mining stocks. So what about the junior mining invest - ment opportunities that we cover in depth? Whitney George, President, Sprott Inc.; Chief Investment Officer, Sprott Asset Management; Chairman, Sprott US Holdings, commented in an interview by Maria Smirnova, Senior Portfolio Manager for Sprott Asset Management, "These are the early innings of what we believe will be a new, prolonged M&A cycle. We see tremendous potential especially in the junior mining space, given that smaller gold mining companies are trading at a material discount to larger mining companies." Well, that's a pretty positive attitude for the future. How about being more specific? In this issue, Rick Rule, President and CEO, Sprott U.S. Holdings, Inc., mining company financier and inves - tor extraordinaire, discusses why he favours three investment targets; namely, mergers and acquisitions; royalty and streaming companies; and exploration prospect generators. He also favours companies whose mineral of interest is destined to rise in value for solid reasons. There is no doubt that there are junior mining investment opportunities out there. Besides a great project, investors like to see a good track record of success. Currently, high-risk private placees are getting pickier. Despite this scenario, juniors still need to arrange financings to go explor - ing – not always easy to accomplish. The bottom line is that despite the mass psychology of inves- tors currently deeming the junior mining sector out of favour except for a few big winners, in the end, good fundamentals will prevail: a very attractive project in a safe geopolitical jurisdiction, a desirable mineral commodity, competent management and a healthy treasury. n Is the modest mining sector turnaround a subtle clue for a renewed up-cycle?

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