PDAC offers miners feast of information

TORONTO - For a first-timer, attending the 77th Prospectors and Developers Association of Canada annual International Convention, Trade Show and Investors Exchange overwhelmed, teased, tantalized and downright exhausted.

Though folks remarked that convention attendance seemed down from the record-breaking levels of recent years, one couldn't discern any slackening in the steady streams of dark-suited conventioneers pouring onto the escalators in the multistoried convention hall, or crowding into meeting rooms at neighboring hotels. Nor could one see the reduction in the folks wolfing down quick lunches at tables crammed into the lobbies outside meeting rooms and the sold-out trade show and investor exchange that boasted 1,000 booths of hopeful mining companies and service firms.

PDAC (pronounced "pee-dack"), the world's largest convention and trade show for miners and mining companies, geared up March 1-4 and wove its annual networking magic. And what a spell it was!

As a bitterly cold wind whistled through the canyons of skyscrapers in downtown Toronto, a varied and relentless pageant of presenters offered an estimated 20,000 delegates the latest information and best advice available in mining or exhorted them to take action on everything from developing strong relationships with the locals to striking better deals when raising critically needed capital. Delegates got an earful on mining history, geology, environmental practices and government regulations. And one lucky uranium miner from Saskatchewan took home a $16,000 diamond ring won in a raffle.

More than 1,000 exhibitors

At the Investor Exchange and Exhibitor Trade Shows, mining companies, regional governments and organizations as well as contractors offered tantalizing glimpses of mining projects from Afghanistan to Australia.

At Hard Creek Nickel Corp.'s booth, Executive Vice President Neil Froc touted advantages of the Turnagain Project in northern British Columbia, but also observed that a compelling opportunity awaits developers of all of the rich mineral deposits of the region if they can convince the B.C. government and other stakeholders to extend the proposed Northwest Transmission Line, a 287-kilovolt power line along Highway 37 to Dease Lake. The Turnagain project is about 70 kilometers, or 42 miles, east of Dease Lake.

While representatives of many juniors in the Investor Exchange appeared glum and spoke of hanging on to their cash as long as possible, a lucky few like Peregrine Diamonds Ltd. chief geologist Jennifer Pell sounded positively giddy about the future. Pell told Mining News that Peregrine recently attracted BHP Billiton to be a partner in its Chidliak diamond project on Baffin Island in Nunavut Territory, after the junior unearthed several diamond-bearing kimberlites in recent exploration. BHP is providing $9.3 million for more exploration at Chidliak this year.

Unlike the Investor Exchange, exhibitors in the PDAC Trade Show hailed mostly from Canada. Among the few participants with Alaska ties were the State of Alaska Department of Natural Resources and Alaska Structures, a manufacturer of rugged, all-weather buildings.

Miners reminded of industry cycle

Here are some convention presentation highlights:

PDAC President Jon Baird said 2009 is the start of a new mining cycle, and this year's convention program was designed to help delegates develop skills and knowledge that will be needed as growth picks up.

"The thing I've learned after four decades is that regardless of how sharp the drop in exploration spending in one year, the mining cycle does come back," Baird told more than 800 delegates who packed the opening ceremonies. "For us, it means that while the capital markets are on pause, as they are now, we have an opportunity to prepare for the future."

Donald Coxe, chairman of Coxe Advisors and a financial advisor who first predicted the surge in demand for metals and other commodities in February 2002, was scheduled to speak at the convention but could not attend due to illness. Instead, Coxe forwarded a commentary on the state of the industry to the convention.

"Although we've had a tremendous setback, it will still prove to be the greatest commodity boom of all time," Coxe noted.

While gold has been the first investment to begin to recover after the financial sell-off, he predicted that base metals will follow.

"The people who fill this room are going to be crucial to the prosperity of the world," he wrote. He urged the industry to "regroup and reload" to get ready for the resumption of commodity demand growth.

Stephen Forrest, principal of a platinum group metals consultant based in Oxford, UK, told delegates that car exhaust catalysts account for almost half of total global PGM use, so falling auto sales have significantly weakened PGM prices from a year ago when supply disruptions caused platinum prices to spike to about US$2,000 per ounce. Current prices are about US$1,000 per ounce.

Forrest said current prices are so low that most South African producers are more than 30 percent under water at current cash costs. He predicts that prices will have to rise to about US$1,600 per ounce over the next decade to avoid major mine closures.

Palladium and rhodium prices also have fallen in recent years. Rhodium slumped from about US$10,000 per ounce in mid-2008 to under $1,000 per ounce, while palladium is down to about US$200 per ounce from more than twice that level in 2008. Both metals are primarily used in car exhaust catalysts, particularly rhodium.

Forrest does see some upside in PGM markets in the years ahead.

"The saving grace for PGMs lies in stronger emissions legislation rather than vehicle production, because this will lead to increased platinum loading per vehicle. PGMs are the key to higher emission controls in both conventional and hybrid cars using fuel cells," he said.

Forrest also sees strong potential from environmentally friendly fuel-cell units that are being developed to power buildings and other facilities.

"We're about three to five years away from this new end use for PGMs."

Forrest predicted that PGM prices could rise because of ongoing supply disruptions affecting South African producers and the rising costs of sinking deeper shafts to exploit new resources.

Focus on working with native groups

The industry downturn triggered by the global financial crisis has stalled numerous mineral projects in Canada and abroad, and is also being felt in established mining camps such as Saskatchewan's Athabasca Basin, which hosts the world's richest uranium deposits.

At a special session on aboriginal participation in the mineral industry, representatives of the Athabasca Basin Development Limited Partnership - the 2008 winner of PDAC's Skookum Jim Award for aboriginal achievement in the mineral industry - said companies servicing the uranium industry are feeling the pinch and consolidation of this sector is expected. Aboriginal employment is as high as 90 percent for some of these companies, so any resulting job losses will affect local First Nations communities.

Canada's uranium industry has long been known for its progressive approach toward providing jobs and training opportunities to aboriginals. Cameco, the world's largest uranium producer, tries to buy at least 75 percent of contracted services at its northern mine-sites from northern Saskatchewan and First Nations-controlled businesses.

The industry downturn has forced some companies to curtail development plans in Canada's North, including Canadian Royalties, which has signed an Impact Benefits Agreement with the Inuit-owned Makivik Corp. for its Nunavik nickel project in Ungava, Quebec.

Glenn Mullan of Canadian Royalties said the harsh realities of the economic crisis forced the company to suspend construction of the project until better market conditions prevail. In the meantime, the company is taking part in a multi-stakeholder effort to clean up historical abandoned exploration sites that were of longstanding concern to local communities.

"We've heard complaints about the garbage left at this sites, in some cases for as long as 50 years, since we started our community consultations in 2000 and 2001," Mullan said. "We didn't cause the problem, but decided it was time to help do something about it."

As many as 600 catalogued abandoned exploration sites are now being cleaned up through a collaborative effort involving 20 public mining companies, local Inuit groups and the Quebec government. At the same time, Canadian Royalties has continued its own clean-up initiatives.

Ontario and British Columbia aboriginal groups and companies were also represented at PDAC 2009, including the Matawa First Nations, which recently signed a letter of intent with the Ontario government to develop a consultation protocol for mineral exploration and development on traditional lands. These lands include the "Ring of Fire" area where several companies are exploring significant nickel-copper, copper-zinc and chromium deposits.

In B.C., the Osoyoos First Nation negotiated an IBA with Merit Mining Corp. for the first gold mine to start operations in 15 years on its traditional territory. Unfortunately operations were suspended in late 2008 because of lower than expected grades and milling recoveries.

Author touts benefits of self-reliance

One thought-provoking speaker was Calvin Helin, author of the best-selling book, Dances with Dependency. In a presentation titled "Prospecting for New Relationships," Helin said solutions to entrenched problems within impoverished native communities can be found by embracing virtues and values of the past.

Helin cited the achievements of pre-colonial native civilizations that developed sophisticated economies, trading systems, arts and culture. Instead of maintaining the "welfare trap" that has stripped aboriginal communities of "ambition and achievement," he advocates a "contemporary reclamation" of the traditional values of self-reliance, self-sacrifice and moral leadership within a larger modern society.

Helin's views have attracted controversy as they run contrary to the views of many aboriginal leaders. "I haven't had much personal criticism because the book has been so popular," Helin said. "But there's no question that it has upset some people in the Indian industry, particularly those who make their living off the misery of aboriginals."

Helin said he isn't swayed by the criticism as he is the son of a hereditary chief on British Columbia's North Coast, a successful lawyer and entrepreneur, as well as a respected author and aboriginal leader.

He believes that resource development offers an excellent opportunity for aboriginal self-reliance in the decades ahead, particularly in light of the population boom in native communities and escalating costs to governments of sustaining these communities.

Helin notes that Canada's aging population has doubled since the 1950s, whereas the native population has grown seven times and includes a much younger population in dire need of jobs and economic opportunities.

Helin says Canada could face a financial and social crisis if nothing is done to encourage aboriginal economic self-reliance. He's taking a proactive approach in this regard by facilitating and encouraging partnerships between aboriginals and mining companies, and also through trade missions to commodity-consuming nations such as China.

"Canada may be in a downturn now, but over the long-term the world will need our resources. Developing these resources is an opportunity for aboriginal people to move up the economic ladder," he added.

Sobering worries about the future

The closing speaker at PDAC 2009 Marc Faber, who publishes the monthly investment advisory Gloom Boom & Doom report, told convention attendees to watch for signs that will suggest an economic recovery is happening, including a weakening U.S. dollar, which he said would indicate liquidity returning to the rest of the world.

But Faber said his big worry is the likelihood that the serious economic recession or even depression that he is expecting will lead to war.

"It won't be the traditional war, it will be poison in the water systems of major cities like New York or London," he said.

He also predicted that an uptrend in commodity prices will continue once the global economy recovers.

"When the global economy recovers, inflation and interest rates are likely to increase along with rising commodity prices," he added.

Canadian journalists Vivian Danielson and Brenda Dalglish contributed to this report.