Metals - The Focus Is On New Supply

Lawrence Roulston (This article was extracted from the March 22nd issue of Resource Opportunities)

The previous issue of Resource Opportunities pointed out that metal prices are up sharply across the board as the mining industry scrambles to produce enough metal to satisfy the growing demand. It will likely be at least a couple of years before enough new supply comes on stream to have any meaningful impact on the supply/demand balance. There just aren't enough big new deposits anywhere close to producing metal. In this Internet age, metal prices are likely to continue to be very volatile, reacting at cyber-speed to every event and rumour. On a day to day basis, share prices will amplify the swings in the metal prices.

Under that frothing on the surface is a growing intensity within the mining industry to find and develop new deposits. The search for new sources of supply will continue to drive the industry, and generate big payoffs for investors in the companies involved in the search. The biggest gains, of course, will go to the companies that make the big discoveries. All of the good companies within the sector should benefit to some extent as growing investor interest generally raises the value of the sector.

I just spent four days in Toronto in the midst of the largest gathering of mining industry professionals in the world. The annual conference of the Prospectors and Developers Association of Canada, better know as simply PDAC, is generally a good barometer of the mood of the industry. This year was off the scale, in terms of the bullish attitude and the shear volume of people, companies, projects and money.

Rest of the article.