In a year of widespread market volatility, mining stocks have proved a useful haven for many retail investors.
But while the commodities rush has revived the fortunes of established players, many juniors are still waiting for take off – with most share prices down YTD.
Yet for one CEO of an AIM-listed company, the case for investing in junior miners has rarely been stronger.
As a former non-executive director of Greatland Gold and now CEO of Power Metal (LON: POW), Paul Johnson believes the sector could be on the verge of a dramatic change in fortune.
With major miners narrowing their exploration pipelines in recent years, he says, it is juniors like Power Metal who will play a vital role in helping the world meet future metals demand.
For many industry-watchers, it’s a familiar story – with boardroom pressures and ESG concerns raising the stakes (at least for major miners) when it comes to mineral exploration.
Tougher investor expectations have played a role too: with industry experts saying that backers now expect a 15 per cent rate of return.
For Johnson, the situation has strengthened the case for collaboration between majors and juniors – with the latter being much better placed to take on the risk of new exploration.
Listed on AIM since 2012, Power Metal currently has active projects in Australia, Botswana, Canada, Tanzania and the US.
One of their flagship projects includes Pilot Mountain, located in mining friendly Nevada, where recent work established a large tungsten Mineral Resource Estimate with significant silver, copper and zinc credits.
Despite tungsten being classified as a strategic mineral, the US currently has no domestic production, leaving it dependent on Chinese supplies.
The company is also exploring for uranium in Canada’s Athabasca Basin and (via an external investment) in Australia’s mineral-rich Northern Territory.
Like others, Johnson remains bullish on uranium, pointing to the fact that three of the world’s largest electricity markets (including France and the UK) are looking to expand their nuclear power outputs.
Power Metal’s recent commodity report cites industry estimates that current production of uranium accounts for less than three-quarters of the demand from existing nuclear reactors.
With the World Nuclear Association estimating that demand could rise an additional 80 per cent by 2040, Johnson predicts the market will quickly become even tighter.
Should its exploration prove successful, the company will look to capture the value for shareholders by spinning out projects via an IPO or selling the rights to a larger player.
It is this strategic outlook, alongside a varied exploration profile, that Johnson hopes will make Power Metal a tempting prospect for investors.