Resource World Magazine

www.resourceworld.com 7 F E B R U A R Y / M A R C H 2 0 1 4 E D I T O R ' S C O M M E N T S E l l s w o r t h D i c k s o n Ellsworth Dickson, Editor-in-Chief Email: editor@resourceworld.com T: 604 484 3800 | 1 877 484 3800 It is a well known fact that mass psychology plays an important and mysterious role when it comes to stock market investors. There are times when there is an irrational exuberance such as the Internet bubble of the late 1990s when share prices of dodgy start-ups were way overvalued – only to crash. Then there are times when companies with real tangible assets are severely undervalued as has been the case for over two years now for many resource stocks. The resulting weak commodity prices, rising costs and negative market sentiment, hammered many miners. And although the idea is to buy low and sell high, many undervalued miners have not been able to attract shareholders. So when Resource World magazine set up its booth at the recent Cambridge House Vancouver Resource Conference, I was amazed to see thousands of people pouring in to attend this event in stark contrast to modest attendances at various resource con - ferences in the past two years. John Baldwin, VP of Operations for Cambridge House, said that the number of delegates, speakers, media, and exhibitors was close to 9,000. Why the sudden interest in mining stocks? Is it mass psychology in action? I already knew that the Venture Exchange had risen well over a hundred points since its low last summer and that gold shares, on average, had recently gone up about 15%. Nickel prices and nickel stocks were rising due to Indonesia banning raw nickel exports. So to get a handle on these positive devel - opments, I joined the throng of investors listening to a panel discussion moderated by market heavyweight Rick Rule that included well respected market analysts John Kaiser, Lawrence Roulston and Brent Cook. Their comments were the most bullish I have heard in some time. John Kaiser (kaiserbottomfish.com) noted that "with cost escalations we have come full circle to where we were 10 years ago in terms of profitability of mining deposits. We have to look for companies with deposits that look good at current metal prices." Kaiser said he would like mining stock investors to become more realistic and not expect fantastic results overnight. He said that polymetallic deposits such as skarns may be of interest. As a caveat, he said to beware of resource nationalism in some coun - tries, areas of civil unrest and areas with First Nations issues. Lawrence Roulston, a geologist and pub- lisher of the Resource Opportunities newsletter (resourceopportunities.com), listed a number of features he likes in a junior miner. These include advanced exploration projects, pros- pect generators, companies with tangible assets such as well-defined deposits with expansion potential, and projects in estab- lished mining camps. Brent Cook, a geologist, (explorationin- sights.com) remarked that exploration is getting tougher and economic deposits are harder to find. He said to avoid companies with mediocre prospects. Cook likes pro- spective areas in Italy, West Africa, Turkey, Portugal, Spain and Colombia. Rick Rule, Chairman/Founder of Sprott Global Resource Investments Ltd., suggested that Canadian resource stock investors take advantage of the flow-through share program whereby their mining share investments can be deducted from taxable income. Canadian mining companies have raised $2.5 billion over the past five years using flow-through shares. Rule likes companies with good projects in prospective mineral belts run by successful management teams. He reminded the audi - ence that "bear markets are the authors of bull markets." Let's hope the junior mining recovery has started. n The mystery of mass psychology By Ellsworth Dickson

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