Sunday, March 1, 2009

PDAC Log Day 1

Day 1 of the 2009 Prospectors and Developers Association Convention in Toronto.

Held in Toronto's convention centre downtown I decided to check out the early afternoon action at this year's PDAC on Sunday.

I was fortunate enough to obtain a press pass which granted me access to both the investor exchange and the trade show delegations. It was moderately busy, though I expect it to pick up on Monday. This year's convention was somewhat muted compared to 2008 when commodities and precious metals were becoming a first page story and Jr. Miners were THE place to be to benefit from the craze. We all know what was to transpire in just a few short months.

Many of the mining and exploration junior's that were struggling last year to get their name known and respected were all the more dire this year. With financing scarce and base metals still dazed from their waterfall collapse, it would seem only pure gold and silver plays with 43-101 compliant resources could ride out the storm and move forward with something to offer investors.

I remember the 2008 PDAC, I was conducting research on Miranda Gold (MAD.V) that was in virtual freefall at the time despite being the darling of Paul Van Eeden and others. (a dire sign of things to come I suppose) There it was, amidst the flash and glitz of Valgold and US Gold's booths (and showgirls) a simple unadorned booth manned by an equally unadorned gentleman sat before a stack of neatly arranged pamphlets and maps. I introduced myself as a "long-time" investor of Miranda, which he understood to mean that I had owned Miranda when it was much higher in price.

We discussed the recent stock price decline and some negative news that had been released about poor drill results. He was optimistic things would improve and felt the quality of management and land packages would save the day. I think working in the mining industry requires a degree of corruption or cock-eyed optimism. Rarely does a person with sufficient technical aptitude posses both in enough quantity to fool everyone. The slick-suited men with silver hair and their back-slapping counter-parts seem out of place against the scores of geologists, former-mining men and investment geeks passing through the various booths. But the man of Miranda seemed earnest in his appeals to better days, clearly the optimist.

I wonder where he is today...and I wonder if he was among the officers and staff who received the generous stock options Miranda recently granted. Its a shame the only news coming out of this company as of late seems to be either newsclips of rosy predictions by Miranda chiefs or financial activity designed to enrich staff. Drill results and core samples would be a great change of pace with most Jr. Miners non?

With gold on the doorstep of $1000 some believe that the Jr. Sector will once again assume its place as the ultimate leveraged play for a higher gold price. Without delving into silver/gold ratio's, capitalization structures and financing activity, I have observed in the past few years a notable decline in interest among gold-bugs in Jr. Miners thanks to the proliferation of double leveraged Gold ETF's.

With that in mind I browsed the many booths and sights of this years PDAC amassing pamphlets and free mints along the way. Today was just a high level overview of the convention, I spent little if any time engaging in shop talk with any of the mining outfits. There was a decidedly muted feel to the booths this year, a welcome change from some of the more flashy displays of 2008. Perhaps the great commodity crash of 2008 make humble men of some.

I enjoyed the ability to access the trade delegation section this year, feeling like a VIP of sorts as others with "civilian" passes were barred from entrance. I was fortunate enough to view the displays of the back-end world of mining and exploration: the equipment dealers, chemists, geological technologists and governmental agencies. I ran into an acquaintance from AMEC Natural Resources, a consultancy company currently working on a variety of PM and base-metal projects. Check out their booth if you get a chance.

After a quick walk-through of the exhibit floor I took a break in the press room, it was there I overheard a conversation by a PDAC delegate discussing her rosy outlook for commodities and among other topics that Don Coxe, former BMO commodity guru was eating crow for his bullish persistence on commodities through last years market collapse. After holding back a bursts of laughter that some PDAC ass-hat involved in organizing the worlds largest mining and exploration Convention would accuse someone of Mr. Coxe's pedigree of making bad bets on commodities. The cherry on top was her insistence that things would improve "as they always have" to which her companion heartily agreed between unusually large bites of free cake and fruit.

This entire scenario reminded me why I love and why I hate the mining industry. I am an outsider, a part-time investor in commodities and gold, I have never been to a mine, read a geology book, or held a piece of gold in my hand. Ive done nothing but read and follow the industry for 4 years, studied its price movements and its players. Ive grown cynical of much of an industry I know very little about. I suspect there are many others like me, metaphorically holding Miranda Gold stock from $2.50 to $0.45, doing late night google searches for free commentary from the Van Eeeden's and Puplava's of the world, feeling like Jim Sincliar is the only person alive that knows your pain as you watched gold kiss $1034 last March never to see it again 1 year later.

This isnt a review of the PDAC as much as its a soliloquy of my feelings on an ancient industry, dedicated to digging up shiny objects that have been ascribed value for time eternal. The lust for these shiny objects drove world trade and exploration for centuries, the side effects were the development of new worlds and societies against the destruction of old worlds and even older cultures. Precious and base metal exploration are the backbone of the industrial roots of the Western Hemisphere. While conditions have improved, slavery abolished and concern for environmental impact becoming required reading for all involved, the investors still face the same uncertianty, suspicion and frustration they did hundreds of years ago trying to make any profit in this sector.

I guess its true what they say: some things never change.

More to come this week on my PDAC oddessy!!!!

aka dr. cosa

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