Survey: Industrial Metals Have 'Greater Case For Investment' Than Precious
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(Kitco News) - Participants in the recent BMOGlobal Metals & Mining Conference were more upbeat on industrial metalsthan precious metals, the bank reports.
BMO analysts late Wednesdayreleased results of a poll conducted during the conference. There were morethan 800 participants in the survey, including responses from all major groupsof conference attendees.
“We believe it provides aninsightful snapshot of corporate and investor views on the mining sector,” theanalysts said.
“Both investor and corporateattendees overwhelmingly agreed that the more constructive outlook lies withthe industrial metals, with over 83% of investors and 76% of corporatesindicating that industrial metals have the greater case for investment,” BMOreported.
In the case of precious metals,investors are still focused on growth and execution of plans, BMO said.Analysts cited survey responses during presentations made by major producersBarrick Gold Corp. (NYSE, TSX: ABX), Goldcorp Inc. (TSX: G, NYSE: GG) andNewmont Mining Corp. (NYSE: NEM).
The responses “suggest that manyinvestors continue to focus on production profiles, advancing growth projects,and growing reserves and resources, particularly ABX [Barrick], wheretwo-thirds of investors are focused on maintaining and growing productionlevels,” BMO reported.
In the case of Goldcorp,investors’ focus is on the company’s execution of its so-called 20/20/20 planand growth projects, BMO said. Goldcorp has publicly stated a goal for a 20%increase in gold production, 20% increase in gold reserves and 20% reduction inall-in sustaining costs by 2021.
In the case of Newmont,“deployment of free cash flow remains topical” to investors, BMO added.
Meanwhile, for large-capitalizeddiversified companies, investors had no mandate for growth but supportedmergers and acquisitions and debt reduction.
“Both investors and corporatesoverwhelmingly indicated that the priority for FCX [Freeport-McMoRan Inc.]management remains the resolution of negotiations in Indonesia,” BMO said. Thecompany is in talks with the government over the future of its giant Grasbergcopper-gold mine.
Analysts said the poll showed“lots of interest” in blockchain technology, although participants appeareduncertain about the impact.
“The majority of investorsreportedly understand blockchain technology, but far fewer appear to understandthe potential impact on their business,” BMO said. “Among corporates, the splitis even between attendees who reportedly understand the technology, and thosewho do not.”
By Allen SykoraFor Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.