Resource World Magazine

Resource World - Feb-Mar 2015 - Vol 13 Iss 2

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F E B R U A R Y / M A R C H 2 0 1 5 7 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: t: 604 484 3800 | 1 877 484 3800 It was certaInly a surprise that Saudi Arabia decided to bite the bullet and not curtail oil production, even though it needs the revenue for subsidies and social programs. Apparently, they are dipping into their $740 billion reserves for their obligations. Other OPEC member countries are already protesting – an OPEC spokes- person said, don't expect any change in the price of oil until at least June. However, the International Energy Agency said non- OPEC oil producers will increase output this year at a slower rate than previously forecast, rebalancing the over-supplied global markets in the second half of 2015. Not many oil analysts or governments saw this coming. This situation has turned out to be a double-edged sword with pain inflicted on oil and gas stocks and declining revenues for oil producing countries such as Russia, Venezuela and Nigeria. It was also a pain for oil and gas-rich provinces in Canada such as British Columbia, Alberta and Newfoundland. Meanwhile, plans are being put on hold for oil and gas projects. With oil plans on hold and a general increase in oil consumption, perhaps the current oil price represents an overkill sit- uation, especially considering the current International Energy Agency's forecast for oil demand to increase by 900,000 bpd in 2015. So, oil stocks may be ugly now, but this could gradually improve. On the other hand, consumers have more money in their pockets with the sig- nificant drop in gasoline prices. Shares in Dollarama Inc. and Leons Furniture have been rising as people have been spend- ing their higher disposable income. Also, companies that use a great deal of gasoline have been really benefiting with substan- tially lower operating costs. While some oil, gas and oil sands proj- ects are cutting back, Exxon Mobil plans to spend up to $25 billion to build a LNG plant at Prince Rupert, BC. In the mineral sector, there have been a few positive developments. On January 12, Fission Uranium released an extremely impressive uranium resource for its proj- ect in the Athabasca Basin of northern Saskatchewan. See Fission Uranium article on page 19. Down in Ecuador, in December, Lundin Gold, formerly Fortress Minerals, acquired the Fruta del Norte gold project from Kinross Gold Corp. This is a big deal as the project is one of the largest and highest grade gold projects in the world. Indicated resources total 7.26 million ounces of gold with inferred resources of 2.55 million ounces. In another acquisition, Goldcorp Inc. is acquiring, through a friendly plan of arrangement, Probe Mines Ltd. Gold has been on a rally and has been flirting with US $1,300/oz, a 5 1/2-month high. I have noticed a recent uptick in shares of numerous junior and senior miners. Goldcorp is already up $10 a share since December and Detour Gold shares have doubled. At the recent Cambridge House Conference in Vancouver, Kaiser Bottom Fishing Report analyst John Kaiser advised resource stock investors to seek out under- valued junior explorers that have great geological potential for a significant dis- covery and money in the bank. While resource revenues in a number of sectors are down, the cyclical nature of the business is at a point where, at last, there are near-term opportunities. n lots of interesting developments in the resource sector

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