In more ways than one, the third and final day of this year’s Diggers & Dealers Mining Forum in Kalgoorlie epitomised the adaptability of the industry it serves.
Forecasts of gale-force winds reaching 90km an hour were enough to – correctly – scare Diggers organisers into action and clear out the massive marquee, which houses 130-plus booths and anywhere up to 2000 delegates, by 10am.
It was a Diggers first and followed by a warning the evening gala dinner might need to become a stand-up cocktail party in the Goldfields Arts Centre if the severe weather warning remained in place.
By mid-afternoon the gale force winds were no longer a threat and the plane from Perth bringing wait staff and food had arrived. The show went on – and well – as it has for every of Diggers’ 31 years.
It also epitomised the choppy weather facing the mining sector and the need to constantly adjust the game plan.
ALL THE ACTION:
But, as veteran mining stock promoter Tim Goyder said in accepting the GJ Stokes Memorial Award last night, it was time to be upbeat and shout over the cynics – “the glass isn’t half full, it’s bloody overflowing”.
Goyder, whose most recent chairmanships have been Chalice Mining (ASX: CHN) and Liontown Resources (ASX: LTR), was a popular choice given his success and advocacy of the sector.
It was double gold for Goyder, with Liontown named the Emerging Company for progress on its Kathleen Valley lithium project.
Lynas Rare Earths (ASX: LYC) was named Digger of the Year for delivering $950 million in sales last year. Lynas boss Amanda Lacaze had earlier made the toast to industry, telling dinner guests Australia’s fortune had shifted from a dependence on riding on the sheep’s back to being on diggers’ shoulders.
The Dealer of the Year went to Capricorn Metals (ASX: CMM) for its $39.6 million acquisition of the two-million-ounce Mt Gibson gold project.
The biggest cheer was reserved for ABC Goldfields reporter Jarrod Lucas, who won the Media award and in doing so became not just the first journalist from the national broadcaster to be honoured but also the first who is based in Kalgoorlie.
A very hearty congratulations to WA School of Mines student Thomas McBeath, recipient of the Ray Finlayson Medal for Leadership and Academic Excellence.
Finally, well done to The Perth Mint, this year represented by new CEO Jason Waters, for its continued sponsorships of the awards.
Also well done to Topdrill owners Tim and Angela Topham, who announced during the week that their annual Diggers fundraiser had raised more than $170,000 for the RFDS.
“We are thankful to the resources industry, our clients and friends of Topdrill who came together and pledged their support for the RFDS,” Tim Topham said.
But for all the upbeat mood across the three-day conference, culminating in the traditional rah-rah-rah last night, the next 12 months will be interesting.
There was a notable lack of news on offer this week – not for lack of activity and trying – which just highlights the challenges.
Explorers are drilling their socks off trying to make that next gold or battery metals find.
But not only is it proving a challenge to intersect something that will move the share price dial, getting the assays back to confirm any good news is seemingly taking forever.
At a time when equity markets investors are not “overflowing” – to verbal Goyder – with enthusiasm and patience towards the sector, exploration success is really important to maintain newflows and market support and momentum.
The thematic around battery metals is strong, of course, but only rewarding companies that are delivering cold hard cash from high lithium and rare earths prices.
There was a consistent view this week – albeit delivered by vested interests – that the gold price is set for a period of upward momentum on the back of global economic uncertainty.
Let’s hope so for the gold producers that still dominate the Diggers speaking circuit and were united this week in noting the inflationary pressures on their cost base.
Free cash flow is king, which over the coming few quarters will separate the performers from the underachievers, while this time next year some of the development stories – not just in gold – will likely be singing a slightly less upbeat hymn.
And expect shareholders to dial up their demands for companies to clearly justify reinvestment of cash flow into their business over the paying of dividends.
This segues into the absence of deal-making news this week.
As the headwinds facing the industry gather momentum, deals will increasingly get done for the overarching purposes of improving operating cost bases (synergies) and securing the next generation of growth (lack of exploration success).
The guiding principles will be to marry undeveloped deposits with existing mills and consolidate neighbourhoods to squeeze out savings.
Gazing into a crystal ball that seems a bit foggy after four nights and three days of networking, expect “sure thing” exploration programs hyped this year to be discarded by next August, “we are smarter than everyone” project developments to lose some gloss and the number of corporate tie-ups to rise sharply as management teams consider it more valuable to sell now than move into a building phase.
But we should be left with at least a half-full pint of confidence.
