As iron ore prices plunged towards US$80 last week, Canaccord spoke of commodity markets "squealing", and several companies in the iron ore space touched new lows. Fairfax commented that the smaller producers could well be put out of business, and highlighted the prospect of imminent "fire sales".
Meanwhile, in the gold space, the pace of consolidation continues. Endeavour's move on Avion was only the latest in a string of deals in the space, and it won't be the last either. West Africa seems a prime geographical location for such a shake-out as so many companies have poured exploration dollars into the region in recent years, and are now chasing an ever-dwindling pool of development capital.
Cluff Gold's John McGloin recently made the confident assertion to Minesite (Cluff cheers the market with increased production, August 21st) that Cluff would consolidate rather than be consolidated. The truth of that assertion remains to be seen, although it is true that Endeavour took a swipe at Cluff last year, and was beaten back.
But Cluff is in an interesting position as it sits on both sides of the fence as far as the current market dynamic is concerned. On the one hand it's an established producer, securing it against the immediate vagaries of the capital and equity markets. On the other hand, it does required a substantial chunk of money to develop its flagship Baomahun project in Sierrea Leone - more than it can hope to generate from existing operations - and future funding uncertainty has been a major factor in undermining share prices lately.
Either way, Cluff would certainly be a prime candidate to appear on any list of West African companies participating in future consolidation, a list that would also include the aforementioned Endeavour, as well as Hummingbird, Aureus, Gryphon, Ampella, Avocet, Perseus, Pelangio, and many others.
No one doubts that there will be a shake-out in the gold space. One in iron ore appears imminent too, as the huge capital spending required by many of the projects in development can no longer be justified by the lower price. Already, the Chinese buyer of Sundance has forced Sundance shareholders to take a lower price, and other deals will no doubt be done at cheaper prices too.
What does the future hold for the likes of Afferro, Bellzone, London Mining, West African Minerals, Equatorial, and others? According several reports this week from the Africa Down Under conference in Perth, the Australians at least still see West Africa as the next frontier in iron ore. We'll be carrying our own roundup of ADU early next week, so Minesite readers will get a chance to make up their own minds.
One thing's for sure, though, the mining equities map is about to be re-drawn in a fairly big way. Mining companies who want to survive will need to keep their stories squarely and clearly in front of investors, and a simple and straightforward way of doing that is to present at one of our Minesite forums. Our next one is on 24th September, and is nearly booked out, but we might be able to squeeze another one or two presenters in at a push. All enquires to Emma Milton: emma@minesite.com
And don't forget to keep abreast of developments on Minesite, and via our Twitter feed and Facebook page.
| 90th Minesite Forum Thursday 27th September 2012 |
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Thursday 27th September
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| World Commodities Week 2012 |
World Commodities Week Europe 2012
24 – 25 October 2012
08:00 – 18:00
London, UK
World Commodities Week Europe is now in its 8th year and brings institutional investors together with both passive and active commodity vehicles as well as industry-leading analysts to explore the outlook for this asset class, as well as redefine the role commodities should play in investor portfolios.
| 7th Annual China Gold & Precious Metals Summit 2012 |
7th China Gold & Precious Metals Summit 2012 is a must choice for decision makers to acquire in-depth insights into the impact and strategy as well as to understand the opportunities and challenges within China's precious metals markets.
For more information, please visit the official event website:
For detailed event information, please contact the organizing committee of 7th China Gold & Precious Metals Summit 2012
To register the event, please contact: Ms.Livia Jin
Tel: +86 21 5161 5380 Email: livia.jin@igvision.com
To inqury event media partnership, please contact: Ms. Christy Ke
Tel: +86 21 5161 5337 Email: christy.ke@igvision.com
| Jobs4mining in association with Minesite.com |
2nd Annual Global Health & Safety Forum in Mining London 18/19 September
Knowing the importance of health and safety in the workforce, Fleming Gulf Conferences is back with this year's annual edition of 2nd Global Health And Safety Forum in Mining.
Mining companies operate in a very risky environment and deal with hazardous materials on daily basis. Lack of awareness cannot only cause millions of dollars but many lives as well. Every company has its own culture, approach and ways of resolving issues.
The event will highlight the main Health and Safety issues faced by the mining industry worldwide. It's a gathering of decision makers who have a say in implementing H&S policies and solutions in their respective companies.
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