Do You want to Know what a Junior Mining Bear Market Looks Like?

Yesterday Alexander and I journeyed down to a well-respected resource/mining conference to take a couple meetings and say hi to some friends I hadn’t seen in a while.

Walking into the conference-centre I noticed it was abnormally quiet in the building, with the usual suspects, who typically hang out in the lobby, nowhere to be found.


There were no boisterous laughs coming from the snack bar, plenty of seats available in the lounge (usually filled with industry people pondering deals), all but one meeting room was vacant and there wasn’t the slightest buzz in the air. It was somber to say the least.

The TSX Venture has been in a bear market for about two years, and I wasn’t expecting the same PDAC-2010-environment of big money deals and packed restaurants, but this was quiet... very quiet.


Walking over to the entrance of the conference I was optimistic the crowd would pick up, but no such luck. Take a look at this picture I took. This is the entrance to the conference. Typically, at the end of the escalator is where the line-up begins for people to enter… this is what a bear market in Vancouver’s mining sector looks like - a handful of drifters hanging out at the entrance to a mining show.




Inside the conference, which basically consists of a slew of public companies at booths trying to attract interest from attendees, I found investor relations people hanging out with one another as if it were the halls of your old high school. There were very few investors in the building by the looks of it (aside from those who work in the industry) and the level of productive chatter going on was at best a 1 out of 100.

I walked over to the presentation area, which is where analysts, newsletter writers and the like give talks to the public on what type of investments they fancy, and this is what I found (a couple minutes prior to a presentation):



By the time the presenter began, perhaps another 20 people showed. In years prior at this conference, the room was filled (with people standing in the back on many occasions).


After grabbing a water and making my way to the exit I spotted a familiar face who is very well-known in the Vancouver business community and mining circles. He runs an advanced junior mining company (among other ventures) which, unlike many juniors at this time, is flush with cash; yet there he was, working the booth, a role typically given to the investor relations representative of a company. I went over to have a quick chat and see how things were progressing for him and the company. While I have only ever known him as a very optimistic business man, which is probably why he has been so successful, the wind has clearly been taken out of his sails. We talked about the state of the market, and it was nothing but doom and gloom coming out of his mouth. Despite having a world-class asset and a treasury balance which could sustain his company for several years to come, he was deflated. He was as gloomy as the rainy Vancouver weather which so fittingly suited the mood of the conference.


After about an hour in the conference I had seen enough and desperately wanted out of there. Misery loves company and there wasn't any benefit in sticking around.


The environment in the Vancouver mining sector right now is worse than in 2008, much worse in fact. Veterans of the industry are saying the same amateurish things we hear on TV… the old “this time is different” and “it has never been this bad”.


The TSX Venture (which consists primarily of junior resource plays) is in the middle of a long and drawn-out bottoming process. Many more companies will go bankrupt, investors will take more losses, but this market will turn and if you want to know what a bottom looks like, you should’ve been at the conference yesterday.

It is always darkest before the dawn.

http://www.youtube.com/watch?feature=player_embedded&v=5-ScUeKSnNs

The TSX Venture still has another couple hundred points to lose before I would call an official bottom and bet big (I've made the mistake of calling its bottom too early before - click here for my miscalculation), but we are getting close.

Aaron

http://www.pinnacledigest.com/blog/aaron-hoddinott/do-you-want-know-what-junior-mining-bear-market-looks

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