Mining equities sell-off. .... From this morning's issue of Canaccord Wealth Management's Morning Coffee
Lost in Space: What's in the stars?The mining equities sell-off has left no one untouched. Junior explorer, intermediate and senior producer, no one has been immune to the risk aversion in the market. There is no specific reason why mining shares have sold off so sharply, the reasons vary day-to-day: China growth fears, European concerns, weaker commodity price outlook, disappointing 43-101, disappointing PEA, disappointing PFS, disappointing joint venture announcements, higher cost guidance, higher taxes/royalties, poor exploration results, poor production results/guidance, labour unrest, political instability, risk of expropriation, natural disasters, crappy weather, etc. Pick a day, choose an excuse. We've witnessed significant technical breakdowns with companies falling through their 200-week moving averages. Many a technical analyst would tell you these charts look broken. Companies that took advantage of one of the previous financing windows and raised capital to advance their once high profile assets, are in a "bittersweet" scenario. These bittersweet companies have had severe corrections in share price, but continue to maintain a strong cash balances. Should these companies continue to spend their treasury to advance their projects or chose to conserve capital? Only time will tell what the right course of action will be. There is however a growing list of companies that are now trading ex-ore body (trading at or near cash value). Separately, while some projects on Earth have been shelved because of poor economics, Planetary Resources Inc. plans to send an unmanned spacecraft to an asteroid and mine it for valuable metals and water that could be used in further space exploration or returned to earth. According to The Wall Street Journal, the company is backed by a group of billionaire types, including Google (GOOG)co-founder Larry Page and Hollywood director James Cameron. The company believes, "asteroids could yield "astronomical quantities" of minerals such as iron and nickel that could be used to build components for housing space explorers, and supply water for a fuel source." Rocket scientists like those at NASA say by 2025, mankind could eventually use robotic spacecraft to capture 500-tonne asteroids and bring it into orbit around the moon so that it could be explored and mined. Adventures like this could cost several hundreds of millions or a billion dollars at least. Hey, Mr. Spock. Where's the logic in that?