Issue link: http://resourceworld.uberflip.com/i/229125
EDITOR'S COMMENTS E llsworth D ic kson Looking Forward While NYSE and non-resource TSX companies had a good year, it's no secret that, for the most part, 2013 was disappointing for resource stock investors. There were some bright spots based on excellent mineral discoveries such as Alpha Minerals and partner Fission Uranium; however, the resource-heavy TSX Venture Exchange still remains mired in negative investor sentiment. Some of the basic problems facing mining stock investors include weak commodity prices, very short-term, high frequency trading by professionals as opposed to long-term investing based on fundamentals as well as insufficient market participation to bid up share prices. The negative market sentiment has hammered junior exploration stocks – even those with a great deal of metal defined in the ground. This has resulted in financing problems for juniors. If your share price is 4 cents, your company will suffer share dilution with a decent financing which doesn't help the price of your stock. In any case, a couple hundred thousand of hard-to-raise dollars has to go into maintaining a listing and keeping an office open, rather than going into exploration. And that's exactly what this market needs – exploration and big discoveries. Even the producing seniors, which have been hard hit by rising mining costs, have been laying off exploration staff. This may solve a problem short-term, but it's big discovery area plays that have traditionally jump-started the junior sector. Remember Voisey's Bay, La de Gras and Hemlo. While gold is still in a bear market, there are favourable circumstances waiting in the wings such as the combination of declining world gold production, lack of big discoveries and the US Fed printing billions of paper dollars. Eventually this must positively impact the price of gold and, in turn, gold mining stocks. Basically, there are three kinds of companies currently worth looking at: feasibility-stage companies with a favourable bottomline number, producers with high margins and explorers with discovery potential. In this issue, we report on 10 companies that have had some kind of favourable economic assessment and we also provide outlooks on commodities and energy. Simon Rees takes us into the world of running a junior resource company and we learn what they are doing to keep their dream alive. We also present some investment ideas from Canaccord's Prentice Lee and the Hoesgen twins. Energy expert Thomas Drolet examines that sector. We have been through painful downturns in the junior mining sector before: 1997 – 2002, for example. With the growth in world population that will need housing, infrastructure and consumer goods that use mineral commodities from potash to copper, the mining industry is, of course, here to stay. Nobody knows when the Venture Exchange will pull out of its slump. It's up to resource stock investors to figure out the best way to play the market under the prevailing conditions. There will be capital gains to be made in 2014. As noted market analyst and investor Rick Rule points out: the best companies will be the first ones to benefit from a recovery. n Ellsworth Dickson, Editor-in-Chief Email: editor@resourceworld.com T: 604 484 3800 | 1 877 484 3800 DECEMBER/JANUARY 2014 RW December 2013.indd 5 www.resourceworld.com 5 12/11/2013 6:11 PM