Miners at a turning point
After five long years of share price weakness, the first quarter of 2016 has seen a reversal in investor sentiment towards miners – having only recently been regarded as “risky” and “irresponsible”, this perception has changed to “rational” and “cheap”. The switch has been marked by a short and aggressive rally in both mining equities and mineral commodities. Capitulation is over, and strong cash generation and growth appetite in gold is likely to lead to more balance sheet funded M&A. Most importantly it has recently become possible again for small non-producing miners to raise funds, albeit quite selectively. Realisations that miners are 1) cheap and 2) probably have very little downside on price, have now set in. With the return of liquidity to mining equities now well underway, the Lion Clock has moved to 5 o’clock. There is likely to be volatility as the market steadies, and upward movement across the broader mining market will only follow a period of consolidation. Conditions are now ripe for the commencement of the next boom. (VIEW LINK)
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