Despite gold prices soaring above $2,600 per ounce, the mining sector has yet to see the full benefits, according to Warwick Smith, CEO of American Pacific Mining Corp. In a recent interview with Kitco News, Smith explained that while the current market conditions are favorable for junior exploration companies, renewed investor optimism is the missing ingredient keeping capital on the sidelines.
Smith emphasized that for the mining sector to attract fresh investment, the broader economy must improve, sparking a risk-on sentiment. “That’s the piece of the puzzle nobody seems to talk about,” Smith said. “Gold prices rising is great, but what we really need is a risk-on market to draw in generalist investors.”
Smith pointed out that this lack of optimism isn’t limited to the mining sector. Smaller tech companies and start-ups are also facing difficulty attracting new capital, even as major equity indexes like the Dow Jones and the S&P 500 reach record highs. He observed that only a handful of large-cap tech stocks are driving the rally, highlighting the absence of widespread risk appetite.
However, Smith remains hopeful that as the Federal Reserve shifts toward a more accommodative stance, investor sentiment will improve, with mining stocks poised to benefit. “Once the market turns more optimistic, I believe mining companies will see significant interest as investors realize their value and growth potential,” he said.
Copper to Outshine Gold in the Long Term
While gold is currently dominating headlines as a top-performing asset in 2024, Smith urged investors to focus on the growing demand for copper. He believes copper holds greater potential due to its critical role in the global energy transition and ongoing supply shortages.
American Pacific Mining, which describes itself as “metal agnostic,” is developing both precious and base metal projects. Smith highlighted two flagship assets: the Palmer Project, a Volcanic Massive Sulphide (VMS) deposit in Alaska rich in copper, zinc, silver, and gold, and the Madison Mine Project in Montana, which produced copper and gold between 2008 and 2012.
Smith noted that the world will need unprecedented amounts of copper to meet green energy goals by 2050. “To reach these goals, we’ll need as much copper as has been mined in the last 3,000 years,” Smith stated, stressing that the lengthy 16-year timeline to develop a copper mine makes the supply-demand gap more urgent. “We’re incredibly bullish on copper because time is running out.”
Mining Sector Needs to Engage Younger Investors
Smith also emphasized the need for the mining sector to capture the attention of younger investors, who often overlook the industry in favor of technology stocks like Nvidia or speculative assets like Bitcoin. “Mining is seen as outdated,” Smith remarked. “But to move the economy forward, we’re going to need a lot more copper.”
Smith believes that one way to engage a younger audience is by positioning junior mining companies as entrepreneurial ventures. In an opinion piece for Global Mining Review, Smith argued that promoting the innovative spirit within the mining industry would help attract new interest and demonstrate the long-term value of these companies. “We need to highlight the entrepreneurial nature of junior miners to generate excitement among investors,” he wrote.
As demand for metals like copper continues to grow, Smith stressed the importance of junior miners embracing their role in meeting global supply challenges. “The future economy will depend on the resources we provide, and we have to rise to that challenge,” he concluded.
