(Kitco News) – Although the mining industry is suffering greatly, Brent Cook, geologist for Newsletter, Exploration Insights, said he’s optimistic about the sector’s future. Cook was in New York City for the Metals & Minerals Investment Conference and took some time out to talk with Kitco News’ Daniela Cambone and give his insights about the mining industry.
Cook said he is cautiously optimistic about the mining sector as he expects high demand for metal two, five and ten years from now. “I know we aren’t finding enough metal to replace what we’re consuming or producing,” he said. “Further down the road, I’m convinced that quality, high-margin deposits will be worth a lot.”
However, the industry still has to work through its current correction phase, which Cook said is just starting and is expected to get worse. The hardest hit will be the junior mining companies, he added. “[The companies] are cutting cap-ex, they’re cutting new development projects, they’re eliminating exploration, they’re turning inward; they are starting to capitulate.” he said. “Once we see that work its way through, that’s when we’ll know we’re at the bottom.”
Funding remains the biggest problem for the industry as investors are finding other investment opportunities. Cook said that there are 700 mining companies that have $200,000 or less, and that isn’t enough capital to make it through the year.
Despite the grim, short-term outlook, Cook said he thinks the smart play is to look for companies that have properties that investors can value and are trading less than that value. He added investors should also look for companies with good management and enough cash to advance their projects without having to rely on the market.
“If you can find that, then buy it slowly,” he said. “Buy it once and then expect to buy it again for a third less.”
