Resource World Magazine

j u n e / j u l y 2 0 1 5 www.resourceworld.com 5 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 T here are a number of developments taking place that are of interest to resource stock investors: the ongo- ing low prices of commodities, including oil, that are now showing life; the break- out of select mining stocks; the rise of the First Nations; the good mining stocks that the market has not recognized; and the increasing role of specialty metals and minerals. The results of the 2014 annual PricewaterhouseCoopers (PwC) British Columbia Mining Survey was as expected – there wasn't a great deal to celebrate in 2014. The survey noted that lower commod- ity prices again impacted the profitability of the BC mining industry. Aggregate gross mining revenues dropped to $8.2 billion in 2014 compared to $8.5 billion in 2013. While this does not sound terribly bad, net income before taxes was only $288 million, considerably lower than the $1.2 billion the previous year. Without beating this familiar story to death, basically junior explorers con- tinue to find it hard to raise exploration funds, especially in light of the ongo- ing negative investor sentiment. The top 100 junior miners raised a total of $685 million via equity financings in the 12 months ended June 30, 2014 down from $795 million a year earlier. However, per- haps surprisingly, in 2014 exploration and development expenditures from survey respondents actually increased to $234 million, up from $185 million in 2013, but below the $305 million spent in 2012 at the top in the mining cycle. Many junior miners are "proving resilient" by cutting costs; however, some won't survive. Oil has now risen to about US $60 per barrel but it is extremely unlikely to see it return to its higher levels. US $60 may be better than the low of US $44 a bar- rel; however, here in Canada, oil and gas producers Alberta and Newfoundland & Labrador have taken major economic hits. The news that First Nations have now won over 200 court cases with regards to resource development has been a stunning development. To clarify this situation as best as possible, in this issue treaty strat- egist-lawyer-author, Bill Gallagher, has detailed the exact Canadian court rulings on these matters along with comments by the National First Nations Chief, Perry Bellegarde. With hundreds of First Nation bands across Canada, all with their own gov- ernments, it's hard to predict what will happen. For example, the British Columbia government recently announced that it has revenue-sharing agreements in place with 28 First Nations for proposed pipelines. On the other hand, the Lax Kw'alaams First Nation in north-coastal BC has rejected a $1 billion offer from Malaysian state- owned company Petronas regarding its LNG project proposal. Also in this issue, Rick Rule, Chairman and Founder of Sprott Global Resource Investments, provides some valuable insights into investing in mining stocks. And while commodity values are still generally low, he points out that there are both undervalued commodities as well as undervalued mining stocks with the best of the best already breaking out. Could this lead to a more general recovery in quality mining stocks? Specialty metals and minerals are worth following and writer, Simon Rees, reports on the little-known metal scandium as well as the graphite sector that is becoming more important as the lithium-ion battery industry advances. Speaking of advancements, on page 32 you will find an article on the new gen- eration of airships that are being built to service remote mining operations that have no road access. Investors and resource developers will be closely watching as these events unfold. n So, what happens now?

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