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E D IT OR'S C O MMENTS Ellswor th D ic kson Mining stocks ready to rock W ith the TSX Venture Exchange index at only about 30% of its high in 2007, it has been a very disappointing time for mining stock investors; however, there are real signals that things are changing for the better. From its low of 860 in late June, the Venture Exchange has risen to about 952. The value of the listings on the Venture Exchange is an accurate reflection of the junior mining sector as about half its listings fall into that category. There have been several reasons for the prevailing negative market sentiment in the mining sector – massive project write-downs, decreasing metal prices, an economic slowdown in China and the mass psychology that occurs when investors behave like a flock of birds swooping and diving in unison. It is almost as though no one wants to be the first to change his or her mind, leave the flock, and go positive. However, this appears to be starting to take place. Various markets analysts are now noting the change in market sentiment. David Franklin a Market Strategist at Sprott Asset Management, recently wrote that since June 28, gold bullion has appreciated by more than 11% and that junior miners as measured by the Market Vectors Junior Gold Miner ETF, is up 33%. In addition, silver stocks, as measured by the MSCI Silver Index, were up 28% as of August 16. Lawrence Roulston, popular speaker at resource investment conferences and publisher of Resource Opportunities, wrote "in 2008, share prices and commodity prices across the board fell hard, but then rebounded quickly and pretty much in tandem. Somebody could have rung a bell on January 2, 2009 to signal the bottom of the market. Within two weeks, the Venture Index was up nearly 30%. It went on to triple in just over two years. Investors who came into the market in late 2008, when the negative sentiment was at its peak, on average, tripled their money in 26 months." Roulston is not expecting the widespread sharp rebound that took place in January 2009 as the junior mining sector is a different place today. Junior miners that will do well in the coming months will be those with great projects, solid management, as well as money in the treasury or the ability to raise it. Another encouraging development has been a significant number of private placement financings completed this summer, an indication that high-risk money is out there looking for a good home. Some juniors have already been doing very well – mostly due to exploration successes. These include Seabridge Gold, Probe Mines, McEwen Mining, Colorado Resources, Zenyatta Ventures, Pretium Resources, Alpha Minerals and partner Fission Uranium. It would appear there is a strong upside potential for other beaten-down, under-valued, junior miners, although some investors won't believe we have hit bottom until there are more substantial gains. n Ellsworth Dickson, Editor-in-Chief Email: editor@resourceworld.com T: 604 484 3800 | 1 877 484 3800 SEPTEMBER 2013 www.resourceworld.com 5