"It was all about Diggers and not much from the Dealers this year. It felt very upbeat like last year though. The M&A space felt charged, but high asset valuations has seen a failure to launch at the present time. It felt like the school formal where the first couple to dance leads everyone else in, so once we see one transaction, I reckon that might open the floodgates, and unlike last year, the Aussie mid-tier golds will be doing the hunting after a big re-rating in 2018.
Nickel players continued to show their potential to dovetail in with the EV revolution. Every one of the miners is spruiking technology and it won't be long before gold miners will be driving trucks out of Perth like their iron ore counterparts. A few new stories gaining some traction like Genesis Minerals having success at Ulysses but few genuinely new discoveries which we hope will come before Diggers 2019." James Wilson, analyst, Argonaut Securities
"Sentiment was generally positive, reflective of the increased exploration activity and significant free-cash flows being generated by the larger domestic producers, particularly in the gold sector. One of my Canadian colleagues mentioned that he heard the word ‘dividends' more times at Diggers than he has in the past 10 years on the North American conference circuit. Most of the mid-cap Aussie miners are in great financial shape.
The current set-up is theoretically perfect for M&A in the gold sector, but opportunities remain few and far between. One new story that everyone seemed to be talking about was Bellevue Gold, which recently declared a maiden high-grade resource of 1.9Mt at 8.2gpt for 500,000oz. The WA-based project looks to have considerable scope for further growth, and notably, it's located within close proximity to NST's Jundee, SAR's Thunderbox, Gold Fields Agnew and EAR's Bronzewing processing facilities." Tim McCormack, analyst, Canaccord Genuity
"I thought D&D lacked the exuberance of last year(s) and that I was expecting - although probably not completely surprising given metal markets in relation to US/China trading relationships in recent months. There seemed to be a lot of the usual faces and behaviour was also more or less the expectation but I felt it was more letting off steam than high fiving. I came away feeling that a fair bit of heat has left the market in the 12 months between conferences, which is no bad thing. 2016 was the start to the boom that no-one expected, and equity performances of the golds and bigger miners were very aggressive - to have gone sideways after that initial push I think probably brings broader mining markets back to a level that is considered more realistic to the generalists who are still only really peeking into the mining space. I thought the remarks on growth out of the various senior gold companies were pretty interesting. Some are sticking with a portfolio size which they are happy with, others seem to be warming the market up for a growth initiative, and elsewhere they are just saying ‘we are looking for a deal but haven't found one'. I wonder if those are the three different shades of a single challenge for the Aussie golds - highly valued in comparison to global peers (although I would argue for very good reason, they have been successful), and the value of paper must make acquisitions tempting and perhaps some targets have baulked at what the acquirer is valued at. Below the well-established producers, I was also struck by the wide range of valuations ascribed by the market for the micro-cap golds and sentiment of the various company MD/CEO's around ability to raise funds or investor's appreciation of their offering. We have seen liquidity for small companies in the last two years - that looks to have dried up a bit for now as investors seem to stick with the larger names.
The other difference for me between 2017 and now (vs ‘16 to ‘17) was the product of exploration dollars that have gone into the ground. Last year we saw reserve growth from bigger companies, and there are now a load of juniors who have been able to deploy drilling dollars too, so earlier stage projects are starting to evolve.
It was the best year I have seen for giveaways. I usually fill my pockets with pens and thumb drives, but this year there was plenty of higher level stuff. I didn't win any bottles of anything, and perhaps it was just me, but there looked to be loads of business card draws to be had. Combined with exploration work, maybe this says the industry has a sense of confidence?" Hedley Widdup, investment manager, Lion Selection Group
"We thought the mood was quite positive this year, tempered with a bit of wariness over recent commodity price action and some of the equities having had a bit of a pullback after the June quarterlies. But, by-and-large, most of the established producers are in great shape. Operations are going well which is supporting strong balance sheets and free cash flow generation. There's a bit of a sense the market is looking for growth - and we think it's there in a handful of opportunities like Pantoro and Regis - but overall the miners are talking a story of strong margins, shareholder returns and capital discipline. We don't think that's a bad thing, particularly with clear evidence this year that costs are on the rise.
It is making it harder to find value in the larger names and that's causing people to look down the market cap totem pole. On that front we still reckon Breaker Resources' Lake Roe project has the makings of a very attractive mining operation." David Coates, analyst, Bell Potter Securities
"This years' Diggers & Dealers was the busiest for some time and there was general mood of optimism. With over 150 exhibitors and 50 speakers, Hartleys' Research also attended 15 site visits throughout the week. As always, Diggers is a great opportunity to reconnect with ex-colleagues and friends from around the industry. One thing we noted and perhaps a relic of last year's conference, was a flurry of investors looking for the next 100,000ozpa+ gold producer.
With the lithium price coming off in the past few months putting stocks under the spotlight, we were asked who had the goods to withstand the volatility? Investors seemed to be also on the lookout for nickel and copper exposure and noted the lack of robust local offerings. Innovation to drive down costs was a common theme among the larger capped attendees; and while many still look to grow organically, M&A was not disregarded." Paul Howard, analyst, Hartleys
"There were a lot more people at Diggers this year and in our view the mid-tier gold sector stole the show with its very strong operational performance and fiscal discipline over the past 12 months. That said, that's more of a rear vision mirror view and looking forward we believe the macro outlook favours mineral sands and copper. For us Sheffield Resources (SFX) was our Top Pick from Diggers for a second year running and MOD Resources (MOD) promising new copper exploration results at A4 Dome had a lot of people talking. But our top new pick from Diggers this year was Venturex (VXR), which is developing the Sulphur Springs copper project in WA, on the back of their recent positive metallurgy testwork results and appointment of new high-calibre CEO, AJ Saverimutto who was previously the general manager of mining at Freeport's Grasberg mine." Steuart McIntyre, analyst, Blue Ocean Equities
"The best way to summarise the mood at Diggers was cautiously optimistic on the commodities sector. Companies either need to be in production with demonstrated margins or have a unique asset to capture the markets attention.
At the big end of town, the Sunday site visits to the larger WA gold mines had everyone talking about how innovation and excellence will continue to drive the value of these companies higher as they continue to achieve record operating margins.
At the smaller end, companies like Adriatic Metals who have attracted the strategic relationship of Sandfire as a cornerstone investor have returned major exploration results that demonstrate the potential for Tier 1 discoveries remain possible.
Overall, it's a trade-off for both companies and investors between the consistency of producer's vs the potential growth of exploration companies with quality assets. Adam Miethke, managing director, Discovery Capital Partners
"Our view of the conference was generally positive, albeit with some level of caution. Good projects are around yet the reduction in exploration spending at the back end of the last cycle means that early stage promising greenfields plays are still a little new to be funding into. That said, there is some interesting markers from some projects that look like they could get them to that next level. Given that base and precious metal projects are our focus we found a number of very attractive stories, both from the juniors and from the mid-tiers that we will follow and also look to further our research on additional opportunities to fund into over the next 12 months." Christopher Alexander, partner, Ibaera Capital
"Diggers was a little flat this year compared to previous years with no real hyped-up sector and a lot of familiar names. Positively, there were more international investors in attendance looking for opportunities.
We are looking to the cashed-up large cap names at Diggers to potentially flush out some further M&A activity." Simon Tonkin, analyst, Patersons Securities