Issue link: http://resourceworld.uberflip.com/i/423464
6 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 5 I n an ideal world, a company's share price would reflect the quality of its assets and the progress it has made. But sentiment driven by prevailing economic conditions is often the overriding factor, particularly dur- ing a bear market. The past year has been immensely frustrating for investors as they watch their resource-related stock picks wallow in the doldrums as equities in gen- eral have marched onwards and upwards. No wonder many have cut their losses and walked away. And yet, as contrarians would stress, opportunity often knocks loudest in the depths of a bear market – when the price of entry is cheap and the potential rewards from a future upswing at its greatest. Made in China Of course numerous factors influence sen- timent, although physical demand, most notably Chinese uptake, is an integral part of the equation. Given this, there was some unease on news that China's growth had slipped to a five-year low of 7.3% for Q3, which compares with 7.5% GDP for Q2. However, the dip was within market expectations and Beijing is still seeking a 7.5% rate for 2014 overall. Some expect stimulus measures (to be rolled out) ensure this figure is met. Away from growth, concerns remain over China's municipal debts, real estate market and sentiment in manufacturing. Another pressure has been China's high inventories and excess processing capacity. In addition, new mine capac- ity and increased rates of production has witnessed supply outpacing demand for many commodities. Iron ore has experi- enced a gruelling year in this regard; iron ore 62% Fe CFR China (cost & freight) prices have slumped around 40% year- on-year to hover at the $80.00/t (all metal prices in US$) level at the time of writing. Unsurprisingly, producers have felt the impact on their bottom lines. For example, Cliffs Natural Resources Inc. [CLF-NYSE] announced on October 17 that it expects to take a $6 billion write-down in Q3 with its loss-making iron ore operations a main contributor to this. Meanwhile, Brazilian iron ore senior Vale SA [VALE- NYSE] reported a $1.4 billion loss for Q3 on October 30. "Despite the fact that Chinese steel production is probably going to be up this year, maybe by 5% or so, iron ore has dropped and dropped sharply," TD Securities head of commodity strategy, Bart Malek, told Resource World. "We're also seeing something similar to what is going on with oil right now: the low-cost pro- ducers, including BHP Billiton, Rio Tinto Down but not out While some mining stocks have done well, too many are mired in the paradox of owning significant mineral assets that are not reflected in their share price by Simon Rees