G+T was pleased to sponsor the RIU Resurgence Conference in Perth this week (and most importantly provided the coffee). It was a live, face-to-face and socially distanced conference showcasing the next generation of ASX listed resources companies. 

Below are our top 10 themes from the conference, which painted a very optimistic picture for the industry’s outlook notwithstanding the economic challenges Australia is facing:

1. Energy and Resources Companies are Coming Home
   • Perhaps unsurprisingly given COVID-19, there was a common theme of junior Australian energy and resources companies re-focussing their exploration and development activities in Australia after forays into overseas jurisdictions.
   • The transition has been encouraged by a number of exciting Greenfields discoveries in districts which had long been considered “mature” or not prospective, such as De Grey (gold in the Pilbara), Staveley (gold in Victoria) and Chalice (base metals / PGE in the Wheatbelt).
2. Resources – Keeping Australia Afloat on the COVID-19 Seas
   • The energy and resources sector in Australia has proven remarkably resilient and adaptable in the face of the COVID-19 pandemic.
   • Australia achieved a record $287billion in commodity exports in the 2019-20 financial year, while successfully keeping the industry and its supply chains COVID-free.
   • This has seen Australia’s reputation as an attractive destination for resources investment enhanced on the global stage.
3. Resources ECM – the Shining Light
   • The buoyant equity capital markets for resources companies continues, leading to oversubscribed offers and high share prices.
   • M&A deals are slower to crystallise and require more structuring to accommodate background uncertainty, but are still happening in the most active sectors of gold and base metals.
4. Technology to the Fore
   • Improvements in exploration technology are playing a significant role in opening up entirely new mineral provinces and may be enhancing the economics of exploration.
   • For juniors, it is no longer a case of “drill and hope”.  We saw many presenters explain their methodical approach to exploration employing a range of approaches from soil chemistry to airborne geophysics and seismic surveys, all before a single hole is drilled.
5. NSW – the new Western Australia?
   • While Broken Hill in New South Wales represented the first large-scale mining activity in Australia in the late 19th century, Queensland, Western Australia and more recently South Australia have tended to be identified as “the Mining States”.
   • There was a renewed buzz at the conference over the potential of New South Wales to (re)emerge as the next major mining jurisdiction for Australia, with many explorers targeting copper, gold and other base and specialty minerals in the well-known Lachlan orogen. 
   • The Geological Survey of NSW (GSNSW) is investing heavily in improving its information assets with a view to encouraging greater investment in the sector.
6. ESG – No Longer at the Periphery
   • Another theme running through several of the presentations is the need for mining to enhance its environmental, social and governance (ESG) credentials, given that managers of approximately 47% of the A$1.3 trillion of pooled investment funds in Australia apply some form of ESG overlay to their investment decisions.
   • Resources companies are looking at a multitude of initiatives in this space, from investing in community assets, achieving carbon-neutrality through fuel switching and adopting best practice environmental and social sustainability measures.
   • We expect ESG issues to be particularly important for minerals that are viewed as an integral part of the clean energy transition such as nickel, lithium, cobalt and rare Earth minerals.
7. Copper - As Good as Gold?
   • Everyone knows gold is having its time in the sun, driven by a combination of accommodative global monetary policy, ballooning Government deficits geo-political uncertainty.
   • But many conference attendees suggested that copper could be the next metal to see a peak in demand, as average mined grades decline globally and the green energy transition takes hold.
8. East vs West
   • Geopolitical tensions are driving more of a divide between East and West in the sourcing of critical mineral supplies. 
   • This may lead Western countries to prefer supply from other, stable Western jurisdictions such as Australia, as China works hard to incentivise production from emerging economies that carry more jurisdictional risk.
   • China has also taken the opportunity during the pandemic to restock its finished metal inventories, which may explain why commodity prices have remained relatively strong notwithstanding the massive demand destruction wrought by the virus and Government measure to respond to it.
9. Partnering up
   • Historically, junior companies have tended to jealously guard their independence, preserving their “corporate appeal” to maximise the benefits of a liquidity event (such as a takeover) should their efforts be successful.
   • However, we noted that it is now more common for juniors to have a large or mid cap company with a strategic position on the register or involved in an early stage exploration joint venture. Whether this represents a permanent shift in sentiment – or simply a remnant of a time when raising capital was more difficult than it is at the moment - remains to be seen.
10. Battery minerals – resting, not dead
    • The electric vehicle (EV) story is still likely to drive demand for battery minerals including lithium and nickel in the medium term.
    • Although a lot of the hype has come out of the lithium industry for now, several presenting companies had their eyes on a looming shortfall of the metal in 2022 – 2023.

For further information please contact our Corporate Advisory Partners, Justin Mannolini, Sarah Turner or Julie Athanasoff or our Energy + Resources Partners, Claire Boyd or Michael Blakiston.