Diggers and Dealers 2024: All that Glitters is Gold
The mining industry showed resilience at Diggers & Dealers 2024 despite a rollercoaster ride for commodities, with gold taking centre stage.
It's been rough out there.
Lately, we've seen the prices of copper, nickel, and lithium all come off, and the turnaround all the experts predicted would happen by year-end looks to now be pushed into 2025.
But it's not all doom and gloom - gold's been the standout, holding near all-time highs after years on the sidelines.
The small-cap space is seeing a rather tough time as well, with many putting out announcements and getting a muted response from the market, so what is going on?
To get a better handle on things, we did what any self-respecting mining enthusiasts would do – packed our bags and headed to this week’s Diggers & Dealers Mining Forum, the biggest mining conference in Australia.
For three days, Kal becomes a melting pot of mining giants, scrappy juniors, deep-pocketed funds, and investors. It's a whirlwind of presentations, lunches, dinners and talking shop over a pint (or three).
The Equities Club team seized the opportunity to connect with hundreds of industry insiders, gauge market sentiment and gather insights to shape our strategy for the year ahead.
A key takeaway? Opportunities exist even in down markets. It's about thorough research and strategic positioning for when - not if - the market turns.
From Little Things, Big Things Grow
Diggers & Dealers has come a long way since it was first held in 1992. What started as a modest gathering of about 200 attendees has evolved into a cornerstone event of the Australian mining calendar.
Fast forward to this week, and the conference drew a record 2,800 attendees over three days, with over 150 exhibiting companies and more than 80 company presentations.
Many junior companies, unable to secure a formal presentation slot, get creative. Think impromptu lunch pitches at the local pub or late-night schmoozing sessions in an effort to get their story in front of as many potential investors as possible. It's a bit like geological speed dating - "Here's my project, call me maybe?"
It's not all company show-and-tell, though. You've got mining CEOs, number-crunching analysts, and even government officials (Former federal ALP leader Kim Beazley was this year's keynote speaker) sharing their two cents.
It all provides valuable insight into the industry's current state and future direction.
The conference is crucial to the mining industry. It's where partnerships are forged, deals are struck, and the future of the industry takes shape.
This year’s themes
Despite the commodity market rollercoaster, this year's conference was well-attended and provided valuable insights into the industry's pulse. Here's what got everyone talking:
All that Glitters is Gold
Gold stole the show this year, and for good reason. With ongoing economic uncertainties, gold continues to be a safe haven for investors. Established companies like Northern Star and Evolution Mining have shown strong financial results and growth in their gold reserves. Northern Star reported significant cash flow generation and increased ore reserves. At the same time, Evolution Mining has continued to expand operations despite market challenges.
This positive outlook is driving continued production ramp-ups and exploration across the sector.
From the directors of gold companies that we spoke with many were happy to see some love back in the sector. As one anonymously said to us “about bloody time investors woke up”.
It’s easy to forget gold exploration accounts for half of all exploration globally, so for the precious metal to start to get some enthusiasm we believe will bode well for the broader mining sector.
Small-cap gold companies are also showing potential, offering investors a way to potentially counterbalance negative areas of their portfolios. In the face of ongoing market instability, these companies can not only help preserve capital but also deliver gains, given drilling success.
Battery Metals: Cautious Optimism
Despite deflated pricing, battery metals remain a hot topic. While caution prevails regarding supply forecasts, there's optimism about increasing demand as we progress through the decade.
We spoke with a CEO of an ASX-listed company with a huge lithium deposit in Canada, let’s just say he is also familiar with the Pilbara (we’ll let you join the dots) and he was quick to point out long-term forecasts and ensuring investors look for low-cost producing potential.
Small Caps: Location and Timing Matter
Our biggest takeaway is that when looking for small caps, you either want something near a processing hub or you want some incredibly good targets to be drilling. The opportunities in the market do exist; it's just about timing and backing in the right team.
In conversations with brokers, a common thread emerged: the importance of discipline in the current market. They emphasised thorough research, focusing on management team, project location, and timing before making investment decisions.
Whether it’s a gold or battery metals company, it’s important to now focus on companies who are exercising caution with funds, whilst looking to build long term projects.
Even amid early-week market turbulence and ongoing industry challenges, Diggers & Dealers proved once again why it's a cornerstone event in the mining calendar.
Well-attended and expertly run, it provided valuable insights into the industry's current state and future prospects, reminding us that even in uncertain times, the mining sector is resilient and opportunities abound for those who do their homework.
As the old adage goes, 'The best time to plant a tree was 20 years ago. The second best time is now.'
We look forward to many more years of Diggers to come.