The recent troubles of the mining industry have been well documented, and the uncertainty surrounding the sector has seen the price of some commodities slump, along with the share prices of many miners. Large project deferrals by major mining groups, violent strikes in South Africa, the continuing spectre of resource nationalism and an apparent cooling of infrastructure investment in China have done little to allay fears that a decade-long hard commodities boom may be over.
But that doesn't seem to have affected private investor interest in the resources industry, if a full house at the Investors Chronicle's recent Profit from Junior Resources seminar is any indicator. Ninety paying delegates attended the event at the Financial Times building on 31 October to hear views on the outlook for the mining industry from IC editor John Hughman, and the methods employed by commodities writer Matthew Allan to assess the prospects of junior resources shares.
The IC was joined by executives from three mining companies hand-picked by Matthew using his eight-point mining toolkit - which also forms the basis of this week's cover feature, which you can read on page 24, along with three new mining stock picks that meet his criteria. All of the presenting companies demonstrated that, although industry conditions are hardly favourable at present, investors put off by the current upheaval are ignoring the huge opportunities in companies mining the right metals in the right places - and the fact that the urbanisation of the emerging world still has a long way to run.
Afferro Mining, for example, is developing a huge high-quality iron ore deposit in Cameroon, a stable African region with a friendly mining code. This combination of factors, explained chief executive Luis da Silva, means exploration is proving extremely cost-effective, and the project looks likely to be economically viable even at conservative ore prices.
Rising costs are also a troubling feature of the gold mining industry at present, although the resulting sell-off has left some lower-cost miners looking too cheap - including Azerbaijan-focused Anglo Asian Mining, an earlier Simon Thompson bargain stock pick. Reducing costs is a key focus of the company, through extending mine-life and the construction of a modern agitation plant. The completion of this project will leave the group free to explore new prospects across the Caucuses to expand its resource.
Our third guest, Toronto-listed Mkango Resources, is exploring a potential 20m tonne rare earth complex in Malawi. With much of the world's supply controlled by China, accessing rare earth investment opportunities has not been straightforward for UK investors - yet, as an important raw material in the manufacture of modern electronic goods, it is likely to prove a valuable seam of investment as rising global wealth increases demand for consumer items.
All of the presentations from the event can be found online at http://www.investorschronicle.co.uk/2012/10/26/profit-from-junior-resource-shares-MOKHy8rIV2T3uqV9heDGEI/article.html.