Biggest Surprise Of The Year So Far: Optimism Bubbling Over At The Fremantle Explorers Conference

By Our Man in Oz

The world of mining can be loosely divided into two camps: one occupied by pessimists who are working in the mines and the other by optimists who are the explorers with a ticket to roam free.

Grasp that simple human demarcation and you will also understand why an Explorers Conference being held in the Western Australian port city of Fremantle is bubbling with confidence.

To a casual visitor, which is what Minesite’s Man in Oz was earlier today, a hotel lobby and conference facility filled with 700 enthusiastic delegates, exhibitors and investors seems out of whack with much of the wider mining world where gloom pervades.

But, after a few minutes inside the historic Esplanade Hotel the penny drops. These are not people faced with the day-to-day grind of producing minerals at a time of strict cost-cutting, job shedding and mine closures.

These are the people hunting for the next generation of mines, armed with a pocketful of capital, enough fuel to keep an old Land Rover ticking over, and a map with an X on it saying “drill here”.

If you can forgive the exaggeration but hold the image of a room full of optimistic people you might understand that this is the grass roots of mining, a place where it really is better to travel than to arrive, and we all know the excitement of escaping from an office and driving into the countryside for a spot of fresh air.

“It’s like pre-season football training,” said conference organiser Stewart McDonald. “Everyone is just getting their boots on and no-one knows how the season will play out.”

Interestingly, the same could be said of last year’s conference in the same hotel where exactly the same number of delegates enrolled, as they did in the two years before that, with optimism the hallmark – as it always is with explorers – or why would they bother?

The biggest change this year is that gold has made a storming return. Stewart reckons that 50 per cent of the companies attending are involved in the search for gold, double the 25 per cent of last year.

Iron ore, once the darling of Australian explorers, is virtually a no-show, such is the impact of the dramatic fall in the price and the hefty losses posted over the past week by small producers, including A$1 billion from Atlas Iron and A$870 million from Mt Gibson.

A typical explorer…

Another difference is the way the crowd has divided. Stewart reckons that in prior years the event was divided at any one time into thirds. One-third would be in the conference hall listening to speakers. One-third would be in the exhibition area, and one-third in the hotel lobby where deal talk could be done in comfort.

This year the conference hall is sparsely populated, perhaps a comment on the fact that all the talks and accompanying slides from the 35 companies which have booked podium spots are available on-line, which leads to this observation: more conference delegates than ever are opting out of the conference hall to avoid sitting through a presentation which can consist of a painful reading through of what’s on the screen.

“It looks to me like three-quarters of the crowd are in the lobby and exhibition area, for a variety of reasons,” Stewart said. “Some people are talking deals. Some people are looking for jobs and some are just networking.”

Whatever the reasons there is no doubt that optimism rules in Fremantle, a mood so different to what can be found a few kilometres up the road in West Perth, one of the local homes of mining, that it’s akin to being transported to a different planet.

Companies which caught the eye of Minesite’s Man in Oz, and this is a report filed from the first day of a two-day event, included Blackham Resources, Vimy Resources, Mithril Resources, Gold Road, Northern Star and Doray

Blackham is the new owner of the once famous Wiluna gold project which has been renamed the Matilda project. Managing director Bryan Dixon, is confident of hitting an annual production target of 100,000 ounces of gold a year at an all-in sustaining cost of between A$1,000 and A$1,100 per ounce, good enough to generate a profit margin of around A$500 per ounce thanks to the Australian dollar sliding below US80 cents, and perhaps heading further south.

Vimy is the renamed Energy and Minerals with the long dormant Mulga Rocks uranium project in Western Australia as its core interest. Japanese explorers discovered Mulga Rocks decades ago but the vagaries of the uranium market, coupled with land access issues and a messy ownership structure has thwarted progress. Today, Vimy is being led by a pair of former iron ore stars, Mike Young (ex BC Iron) and Julian Tapp (ex Fortescue Metals). Both men have voted with their feet and moved away from the crashing iron ore sector to a (hopefully) brighter future in uranium.

Mithril has been making news after reporting what looks to be an interesting copper, nickel and platinum discovery close to Meekatharra, a town best known for its historic gold workings. Chief executive, David Hutton, acknowledges that a lot more drilling is required at Stark and the adjoining Nanadie Well discovery but believes the results so far from drilling and downhole electronic magnetic surveys point to the potential for a major discovery.

Gold Road Resources has been on investor radar screens for a number of years as it expands the footprint at its Yamarna project, which could one day be recognised as the fifth great shear zone of gold-rich structures revealed by major earth movements a few billion years ago. Most interest today is in a scoping study which confirms the commercial viability of the Gruyere project which lies inside the greater Yamarna Belt.

Northern Star and Doray are a step up from the grass roots explorers normally attracted here though their success as gold producers, and their ongoing search efforts ensures plenty of investor interest and, in the case of Doray, a trophy to take home, the Craig Oliver award, which is made to the best all-round small-to-mid-tier mining achiever over the past 12 months.

The trick now, as it always is for explorers, is to transfer the optimism of the conference to the wider market, and while that’s never easy a start has been made.