Junior mining contraction to continue for years, says economic geologist Brent Cook

Exploration Insights editor and economic geologist Brent Cook spoke to Mineweb’s Kip Keen about the harsh reality for today’s junior mining investors. “I think we’re in for a long, slow stretch where mines go bust, companies go bust and the sector consolidates,” Cook commented. Read the full article over at Mineweb. Here are a few excerpts:

“…Right now the major mining companies are becoming introverted. And one, two, three years down the road a big realisation is going to come: that they do not have the resources and reserves to continue as a viable business. That’s when we’re going to see the very few quality deposits in junior companies acquired. That’s the positive news to all this. After the dust settles, there’s going to be a few companies out there that are going to be extremely valuable.”

“…The difference now is back in the late ’90s and early 2000s there was a lot more of the world just opening up to modern exploration. So there were deposits sitting at surface that were much easier to find and put into production. Now we’re having to look deeper.

On top of that there are all the problems that come with jurisdictions all over the world: environmental, NGOs, etc. This sort of thing is doubling the timeline to production to at least to five, ten or more years. If you can do it at all. All these things are building up to a crescendo. And so there’s not going to be enough metal to meet supply.

Again, that’s the positive here.”

“Certainly way too much money gets wasted on old dog projects. That’s what the Vancouver exchange (TSX-V) survives on. That’s a function of the way people operate. Put it this way: I can come to you with a project and say I’ve got this fantastic idea to spend a $1 million exploring virgin ground in call it Ecuador. And it’s going to take me two years and at the end of that all I’ll have is some targets ready to drill. Or I can come to you and say, “I’ve picked up this project that’s been drilled by everybody. But there’s some good holes in it. We can twin those holes, jack the price up, you can get off your paper, if you want, and you keep your warrant.”

Money is pissed away on both.”

Source.

About Tommy Humphreys

Tommy Humphreys is a writer, consultant, investor and speaker focused on early stage mining, oil and gas, and technology companies. He founded the Pacific Website Co. in 2006 and CEO.CA in 2012.

  • http://www.winteractionables.com/ Russ Winter

    This is old news, everybody and their brother knows that the wildcat exploration Cook dwells on is dead. So instead why not just focus on the useful, such as the 25-30 or so legitimate advanced stage projects out there of value, that the market values for next to nothing. It seems every project with a cash cost of 500-750, and a capex over $400 million (just about everything) has been given up for dead. That’s where the story is.