Engineering & Mining Journal

DEC 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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www.e-mj.com E&MJ • DECEMBER 2018 75 MINING IN ONTARIO Justin Cochrane, president and COO of Co- balt 27, is bullish about the fundamentals of cobalt and nickel: "For the rapidly increasing EV market, three times the amount of cobalt will be needed to service demand. For nickel, the market will have to double in size. I be- lieve that analysts tend to underestimate how quickly people move from one technology to another, and the industry is most definitely moving towards sustainable EVs," he stated. As CEO of Victoria Gold, Chad Williams, founder and current CEO of Red Cloud Klon- dike Strike, felt that there was a distinct lack of strategic advisory services dedicated to mining from a financial standpoint. Since its establishment in 2012, Red Cloud has helped over 400 mining companies raise funds, complete M&A transactions, and mar- ket assets, among a variety of other services dedicated solely to the mining industry. De- spite entering the market at the start of a downturn, Red Cloud has increased its reve- nues by an average of 50% per year since its inception. Williams divulged one of the tac- tics that has been successful for Red Cloud: "We often take shares in the companies we provide services for as a form of compensa- tion. This has been extremely lucrative, even in a challenging market," he explained. Up in smoke: the legalization of cannabis Despite the renewed sense of optimism sur- rounding the investment climate for mining, competition for funding has become fiercer than ever with the seismic impact of three new industries – cannabis, cryptocurren- cies, and blockchain. Since cryptocurrencies peaked in January 2018, digital assets have crashed, losing around US$600 billion in less than nine months. Cannabis, however, has gone from strength to strength, exempli- fied by the US$3.8 billion investment made by Fortune 500 alcoholic beverage company Constellation Brands in Canadian cannabis company Canopy Growth in August 2018. Canopy Growth, founded in 2014, already boasts a market cap comparable to Barrick, highlighting the scale of the impact the can- nabis industry has made. Executive vice president of IBK Capi- tal, Adam Schatzker, while recognizing that these new industries have taken some of the risk capital out of the marketplace, sees the capital created by cannabis, cryptocurrencies and blockchain companies as an opportunity rather than a distraction: "Mining is notorious- ly cyclical and can actually benefit from the great wealth being created from these new industries… Years ago, the dot-com boom took investment away from the mining sector, which was later reinvested into juniors when equity metal market conditions improved." Denis Frawley, founding partner of To- ronto law firm Ormston List Frawley LLP, lik- ened the cannabis boom to a magnet, pull- ing in capital, focus and talent. He suggested that rather than trying to compete with the momentum of this new industry, junior min- ing companies should present themselves as attractive options for the investment of the vast amount of new wealth being created, explaining: "Investors will want to diversify their holdings, and many of them here in To- ronto have deep knowledge and expertise in the mining industry, so will be open to inter- esting opportunities." Jonathan Goodman, chairman and CEO, Dundee Corporation.

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