Most of the low-cost gold producers are fairly valued, says Michael Curran, managing director and mining analyst with Beacon Securities, so he’s heading down-market to the advanced development opportunities and early-stage explorers that he thinks could become low-cost producers. Sure there is risk, as Curran explains in this interview with The Gold Report, but the reward could come via either a takeover bid by an established producer seeking to lower its overall costs or by supporting these companies as they transition into emerging producers.
The Gold Report: Please give us two or three key investment themes that you envisage happening in the mining equities space in 2016.
Michael Curran: A couple of themes we’ll see in 2016 are arguably continuations of the themes we’ve seen in 2015. The first would be turnaround stories. With a lot of producers there’s a tangible emphasis on lowering operating costs and improving their balance sheets. Some made strides toward that in 2015, but most still have work to do.
Another theme that we’ve seen snippets of in 2015 but will continue into 2016 is merger and acquisition (M&A) activity. Some of the bigger producers are probably in acquiring mode. Those producers either need to bolster their asset base or lower costs by acquiring higher-quality assets.
“Falco Resources Ltd.’s Horne 5 project had some solid drill results toward the end of the 2015 program.”
At the other end of the spectrum, there were at least two instances in Q2/15 where four or five companies joined together. We’re likely going to see more small companies that can’t raise money throw in together to create one stronger exploration and development company.
TGR: When those smaller companies join together, one result is an abundance of projects. How do you choose which asset to develop?
MC: The …read more