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Mines and Money London 2009

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On December 1, 2009, IRJ’s Associate Editor, Nuala Gallagher, and over 2,800 other delegates attend­ed Aspermont Media’s 7th Annual Mines and Money conference. Most of the turnout for the event, about 35 per cent, came from overseas locations all over the globe.

The conference took place at the Business Design Centre in Islington, North London, and was com­prised of a main arena, where some 105 exhibitors set up their booths on upper and lower levels, and a separate conference room where company presentations, discussion panels and lectures were held.

On December 1, 2009, IRJ’s Associate Editor, Nuala Gallagher, and over 2,800 other delegates attend­ed Aspermont Media’s 7th Annual Mines and Money conference. Most of the turnout for the event, about 35 per cent, came from overseas locations all over the globe.

The conference took place at the Business Design Centre in Islington, North London, and was com­prised of a main arena, where some 105 exhibitors set up their booths on upper and lower levels, and a separate conference room where company presentations, discussion panels and lectures were held.

The speakers

The first of several speeches came from Eric Finlayson, Head of Exploration for Rio Tinto, who addressed the issue of the evolving context for global mineral exploration.” Finlayson told listeners he was confident that the rising raw materials commodities market would continue to grow into 2010. “Even in this mature mining environment, there are hidden treasures to be found,” said Finlayson. “Commodities demand has doubled every 20 years and this trend is set to continue,” he added.

His sentiment was not shared by all of the conference’s speakers. Next up was Michael Chender, founder and CEO of the Metals Eco­nomics Group who spoke about the real num­bers behind industry growth. Chender said that the road out of recession could create a serious supply shortage of copper. He also placed great emphasis on the future continuation of China’s market growth and noted the implications this might bring about. “If we do not see a double-dip recession, if Chinese growth continues at pace, then it is likely that we will see scarcity of copper supplies in the next few years,” he said.

The speech delivered by Lee Downham, a partner at Ernst & Young, proved to be a big crowd-drawer. Addressing the topic at hand, “Financing the Future,” Downham said that huge amounts of capital have been raised and cut debt this year, which will result in an influx of IPOs (ini­tial public offerings) as we move into 2010.

“Let’s say there are a couple of $4 to $5 bil­lion IPOs and a handful of smaller ones, you could easily get $20-30 billion of new mining capital on the exchanges from entities that are not already listed,” Downham commented at the conference.

That sentiment, according to Downham, is backed up by the IPO pipeline the market is cur­rently observing.

Another speech titled, “New Opportunities and New Rules for Resources Companies using the Hong Kong Platform,” came from Lawrence Fok, Executive Vice President for the Hong Kong Exchanges and Clearing (H.K.), which greatly em­phasized the recent steps that H.K. has taken to present a lucrative listing environment for mining companies and the wider energy sector.

“Compared to London, Australia or Toronto, we [Hong Kong] are a very, very young baby; 15 years ago the number of mining companies or en­ergy and resources companies on our exchange was zero,” Fok said. “We allow complete freefall of capital information, [and a] simple and low tax phase. Low tax phase means that no matter how much you earn—you can earn $10, $20, $100 million a year—your income tax would never ex­ceed 15 per cent of what you earn” he added.

Fok points out that although Hong Kong’s is the only exchange to appear in both English and Chinese, and all documents must be translated into Chinese, listing exposes companies to a potential 100 million mainland-China investor ac­counts. He also mentions how quickly the market has grown.533 per cent in the past 11 years.

With all eyes on China, his astounding growth figures for the H.K. exchange are impos­sible to ignore.

The company presentations

There is something very exciting about coming across those in the industry who we have not yet had the pleasure of profiling. One such com­pany is Nautilus Minerals Inc., a Toronto-based, offshore seafloor gold and copper explorer with projects in Papua New Guinea, Fiji, Tonga, the Solomon Islands and New Zealand.

“Nautilus is bringing offshore technology that’s been developed in natural gas and oil­field development to the deeper waters of the ocean, to bring high grade copper gold and sil­ver resources to the market,” Scott Trebilcock, Vice-President Business Development and In­vestor Relations for Nautilus said. “Nautilus is focused on developing massive seafloor sulphi­tes. These are precursors to VMS deposits on land and they’re known in the mining industry for processing their standard copper, zinc and lead sulphite materials that carry high precious metal credits.”

Trebilcock said that the company is focused in the South Pacific, but these materials do exist around the world and can offer a fantastic future for the copper, gold, zinc and lead industries.

He talked about Nautilus’ flagship develop­ment project, Solwara 1, which is located down at a 1600 metres water depth in the Bismarck Sea, Papua New Guinea. Mineralogical and met­allurgical investigations conducted on the project indicate ore reserves of over 28 per cent copper. These can be recovered using standard froth flo­tation techniques and deliver copper recoveries of more than 85 per cent.

“The real value for Nautilus Minerals share­holders is the land package we’ve managed to secure. We’ve been working for 15 years securing tenements around the South Pacific, starting in Papua New Guinea,” Trebilcock said. “When [Solwara 1] comes into commercial pro­duction, it will prove the value of this greater land package. Then we plan either through our own developments or through joint ventures, to farm out and start developing these other packages.”

Trebilcock said that looking at the Bismark sea project, the company now has 13 other known, sampled, seafloor massive sulphite sys­tems. These will feed material into this project for many years to come.

The major shareholders of Nautilus look set for an exciting year. Gazmetall Holding of Cyprus has 21 per cent, global giants Anglo American plc holds 11.1 per cent, and Teck Resources, the diversified mining company of Vancouver, Canada, holds 6.8 per cent.

Other presentations at the conference made a huge impression. One company presentation of note came from Mark Bristow, Chief Executive for Randgold Resources, the major African-focused gold miner and explorer, who addressed the cur­rent gold market head on.

“Last time we spoke at this conference we said that Randgold had embarked on its next growth phase, and today I am happy to report that we have since made considerable prog­ress,” Bristow told the crowd. “In fact, a lot has happened at Randgold Resources in the last 12 months. I would suggest that, as I always say, our industry has a habit of growing at the peaks and going bust in the troughs and I wonder some­times if we will ever learn to invest in exploration when the gold price is not at $1,100 so that when it does get to $1,100 our industry will actually make some money” Bristow remarked jokingly.

Bristow considered the future of the gold price and says that there is every indication it will rise a little more, but no one truly seems to know how bad and how long the current crisis will last. “Certainly in this sort of climate of fear and confu­sion, the gold price will continue to show strength and that’s always good for us gold miners.

Catching up and closing speeches

There were plenty of familiar faces manning booths in the main hall this year: Moly Mines, Marengo Mining, Central Rand Gold, Lydian International and Minemakers Limited to name but a few. Unlike the gloomy economic condi­tions which greeted attendees last year, the atmosphere at Mines and Money London 2009 was one of optimism, curiosity and great promise.

On December 2, 2009, two wholly enjoyable days of company news, predictions and discus­sion were closed by Anthony Desir, principal of the SAMI Fund, and his speech titled, “What is China’s Approach to Resource Investing in South Africa and What Does it Mean for Everybody Else”. Desir talked about the ways in which both China and Africa independently seek to gain with­in the coming year, and his perceptions that the Chinese counterparts have yet to convince the rest of the worldwide industry of their ability to manage all manner of investment transactions—within the realms of the international rules and regulations. Desir said that China’s major play­ers have “still not adjusted to doing business in places where the democratic government is the functional process”.

Next year’s annual conference is scheduled to be held in Hong Kong. In light of our current market discussion, and the varying points raised at this year’s conference, that could be an ex­tremely interesting event.

IRJ thanks Aspermont Media for arranging our attendance.

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