The Five Mining Companies to Watch in 2018
LONDON, December 12, 2017 /PRNewswire/ --
What if there were mines without miners? The future of mineral extraction is robots, drones, automated systems, and technology that will eliminate the human element and cut costs way, way down. One mining executive predicts that robots will transform the industry, making it 'unrecognizable [http://www.smh.com.au/business/mining-and-resources/industry-will-be-unrecognisable-robots-will-run-mines-within-decade-anglo-says-20171129-gzvliy.html ] ' in as little as a decade. Included in today's commentary: Rio Tinto plc (NYSE: RIO), Lockheed Martin Corporation (NYSE: LMT), Anglo American plc (OTC: NGLOY), AeroVironment, Inc. (NASDAQ: AVAV), Newmont Mining Corporation (NYSE: NEM).
Aerial drones can survey enormous areas faster and easier than manned aircraft, taking detailed digital notes of the terrain in order to pinpoint the most promising spots.
Sensors dug into the earth can map out the underground terrain at lightning speed, delivering immense amounts of data for analysis, before a single shovel sinks into the earth.
Mining bots [https://www.technologyreview.com/s/603170/mining-24-hours-a-day-with-robots ] will dig without human accompaniment. There will be no need for elaborate and costly safety measures. The time needed to tap into deposits will be cut in half.
Companies like Caterpillar Inc. and Komatsu Mining Corp. have already begun developing automated loaders, excavators and other mining bots [https://torc.ai/press_releases/caterpillar-details-expanded-autonomous-mining-truck-capabilities-developed-torc-robotics ] . New mines are being designed solely for exploitation by robots, with not a single hard-hat miner in sight.
All this means that the global mining sector, which has enjoyed a boom since the commodities crash of the mid-2010s, is set to expand even more [http://www.businessinsider.com/the-global-mining-industry-had-a-us48-billion-turnaround-in-2016-2017-6 ] . The market cap of top mining firms grew by $47 billion in 2016, rising to $714 billion. Debt has been paid down, profits are up and new technologies promise reduced costs for large and small-cap miners.
With the importance of new technology, it's not just miners that will matter for the new mining boom. Drone manufacturers supplying craft for mining surveys will be crucial to the success of mining's new frontiersmen.
Here's a few companies to watch in tech and mining:
#1 Rio Tinto PLC (NYSE:RIO)
The international mining giant Rio Tinto PLC has embraced the technological revolution in mining and is investing heavily in new mining methods that will allow it to mine deeper, longer and at a lower cost than any other large mining firm.
A new mine opened by RT in Superior, Arizona has seen boring of nearly 7,000 feet. The deepest shaft reaches a depth of 1.3 miles, where temperatures rise to 175 degrees F.
The shaft is so deep and temperatures so high, some mining specialists have joked RT hopes to mine "in hell."
Such a project would have been unimaginable ten years ago, but improved technology has made it possible. RT is using automated, robot miners to plumb the depths of earth to degrees that are impossible with human miners.
The company is now planning [http://www.watoday.com.au/wa-news/intelligent-mine-rio-tinto-plans-robotics-driverless-trains-for-pilbara-20171204-gzysux.html ] a $2.2 billion 'intelligent' iron ore mine that will incorporate new robotics technology, along with driverless trains and trucks. The site of the mine is in Western Australia, where RT extracts more than 300 million tons annually, making it the second-largest ore miner.
The company already operates 73 self-driving trucks in its Australian mines, and will likely rapidly expand that fleet in the coming years, as it embraces robotic tech.
#2 Montego Resources (MY [https://finance.yahoo.com/quote/MY.CN?p=MY.CN ]; 4MO1 [https://finance.yahoo.com/quote/4MO1.F/?p=4MO1.F ])
A smaller miner with big ambitions, Montego is currently sitting on what could turn out to be a huge silver deposit.
The company has optioned the Taylor Mine, a historically productive site in eastern Nevada and one which has already enjoyed $27 million in investment by previous companies.
With a market cap of only $11 million, Montego has secured a property that contains 16 million oz. [http://www.silverpredator.com/Taylor-Silver-Mine.html ] of measured and indicated silver, based on historical data. And utilizing new and advanced mining survey technology, drone flights and underground digital mapping, the company's management believes Taylor could possibly contain as much as 75 million oz., worth $1.2 billion at today's prices.
To put the figures in perspective: Alexco [http://financials.morningstar.com/valuation/price-ratio.html?t=AXU ], another silver exploration company with properties in Yukon, holds 68 million oz. of silver and has a market cap of $179 million. Using comparative silver holdings in the ground as your sole valuation metric, that would put Montego's market cap at around $44 million.
That means the market cap of this little company could be much higher, if things work out as expected.
Montego has lined up expert geologists with decades of experience in global mining, and is prepared to use the most advanced methods to unlock Taylor's potential. In the past, it took months of digging and hours of expensive aerial surveys by manned aircraft to estimate a mine's potential.
Montego is turning to drones [https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=2&cad=rja&uact=8&ved=0ahUKEwj076XV-OjXAhWhdN8KHacDBhYQqQIIKCgAMAE&url=http%3A%2F%2Felkodaily.com%2Fmining%2Fmines-adopt-drone-technology%2Farticle_5ca7419b-e1d1-50dc-9ac0-d7214a1adc37.html&usg=AOvVaw23kgqGbxzj5BWE7LVqohe4 ] to quickly put together a detailed idea of Taylor's geology, constructing 3D maps of the area's geographic architecture. Then, the robo-drill arrives and collects soil samples for analysis.
Through such modern mining methods [https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&cad=rja&uact=8&ved=0ahUKEwj076XV-OjXAhWhdN8KHacDBhYQqQIIJSgAMAA&url=http%3A%2F%2Fwww.sfgate.com%2Fnews%2Farticle%2FNorthern-Nevada-mines-adopting-drone-technology-12397267.php&usg=AOvVaw3kyYeTdGrpgnjsCyj8KUeP ] , Montego should be able to determine where Taylor's richest veins lie, at a fraction of the cost of traditional surveying. Once new capital is raised, Montego can go in with automated excavators, robot loaders and trucks. The whole mine could be run with a much smaller staff, as opposed to the army of miners once needed to exploit a typical silver mine.
Plus, the Taylor Mine's superb location makes it an attractive venture. Located only 17 miles from Ely, Nevada and a mere 2.5 miles from US Highway 50, the mine is well-positioned for ease of transport.
Nevada, "The Silver State," is a big mining state with an attractive business and political environment.
While the price of silver [https://www.apmex.com/spotprices/silver-prices ] bottomed out in 2015, it's been rising steadily and could be poised for a rebound in 2018 and 2019.
The Taylor site contains 131 unpatented lodes, 5 unpatented mill sites and 4 patented sites covering 2166 acres. It's already been heavily explored by its previous owner, Silver Predator, which dug hundreds of holes.
An immense amount of exploration, countless surveys and millions in sunk costs means that Taylor's worth has already been proven. With Montego's emphasis on utilizing new technology to make mining quicker and easier, it's likely the company will need to invest only a relatively small amount of capital before it comes up with high quality drilling targets.
This could make Taylor Mine the biggest silver play in Nevada in 2018.
Investors should take note of this company and watch for its news.
#3 Lockheed Martin (NYSE:LMT)
One of the world's most successful defense contractors is also a big player in the world of unmanned aerial vehicles (UAVs), or drones. Lockheed Martin has developed new drone technology that put its products above the rest.
And while most of its drones are designed for combat, marketed primarily to military customers and come with a heavy price tag, the company's tech is certain to find applications in civilian fields such as aerial surveying.
Right now, Lockheed is trying out new technology designed to take down offensive drones. Utilizing the precision laser system ATHENA, that burns drones with high-intensity lasers and brings them down faster and at longer ranges than conventional counter-measures, Lockheed hopes to design the perfect anti-drone countermeasure system.
One demo [https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwj5pN36vvXXAhUKMd8KHeAvC6EQtwIIPjAF&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DXH6NIazR5pA&usg=AOvVaw3rs9-xDGpbjPxlXOPksMIj ] had ATHENA take down five drones in quick succession, proving the technology's viability.
So even while Lockheed is sending drones up, it's working on new and exciting ways to take them down.
Any investors hoping to ride the UAV wave should take notice, particularly as the civilian drone market is set to expand in the future when drones become more widely used in fields such as mining, agriculture and civilian law-enforcement.
#4 Anglo-American (OTC:NGLOY)
Mining giant Anglo-American Plc. has made it clear where it stands on the mining tech revolution: the company has predicted that in the next decade, some mines will be run entirely without a human presence [https://www.bloomberg.com/news/articles/2017-11-29/robots-will-run-mines-within-the-next-decade-anglo-says ] .
The company feels robot-miners with superior chiseling abilities will replace human miners. In a single decade, widespread adoption of such tech will make international mining 'unrecognizable'.
Anglo-American technical director Tony O'Neill, in an interview in August 2017, predicted [http://www.miningweekly.com/article/technology-set-to-unleash-wave-of-mining-innovation-anglo-americans-oneill-2017-08-16 ] a wave of mining technology, including 3D printing, non-explosive rock breakage, medical imaging technology and other methods will allow for quicker, easier, safer and more profitable mineral extraction.
A key aspect of this will be reducing the amount of waste that is brought to the surface. Mining methods haven't changed much in the last century, apart from improved safety. Miners today use immense quantities of energy, time and water to extract only a small amount of useable minerals.
This pivot to new technologies means that Anglo-American will enjoy a surge of new growth, building on its already-sterling reputation.
#5 AeroVironment (NASDAQ:AVAV)
A major name in drone manufacturing, AeroVironmnent has enjoyed immense growth [https://www.cnbc.com/2017/12/06/aerovironment-shares-jump-more-than-20-percent-after-announcing-booming-sales.html ] : the company's revenue grew by 47 percent from 2016 to 2017, pushed upwards by a $23.2 million gain in drone sales, chiefly to the U.S. military.
The company's earnings for the year are around $300 million, and stocks jumped at the news.
The company has sold thousands of small UAVs to militaries around the world, and Wall Street feels it's likely the company will sell thousands more in the years to come. Expectations [https://www.fool.com/investing/2017/07/21/3-drone-companies-to-invest-in-today.aspx ] among analysts have AeroVironment's stock rising by 36 percent annually over the next five years.
And while the company has focused on the military market, it's about to break into the civilian market in a big, big way. AeroVironment's new drone, the Quantix, is designed for commercial applications like agriculture, mining and energy industry applications.
The small craft is designed for a vertical take-off, then morphs into a small airplane for faster, more aerodynamic movement. This allows it to travel farther and more efficiently, allowing it to cover more ground.
This hybrid design will make the Quantix more flexible, allowing it to take on a host of military and civilian applications. It's the first drone to be introduced directly to agriculture, where the use of drones is still pretty limited, and it's sure to find plenty of work in surveying and mining applications as well.
That means it'll be a big earner for AeroVironment.
Honorable Mentions:
Newmont Mining Corp (NYSE:NEM): Founded over 100 years ago, Newmont Mining Corporation is one of the leading mining companies in the world. The company holds assets in Peru, Australia, Ghana, Indonesia, Mexico, and around the United States. Primarily focusing on gold and copper, Newmont has steadily carved out a name for itself among those in the industry. In Q1 2017 alone, the company secured over 1.2M ounces of gold. Definitely noteworthy for investors. By. Meredith Taylor
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