A second surge is forecast in the global resource sector - bringing some stability - following wild swings in the share values of listed New Zealand gold explorers and producers during the past year.
Broker Peter McIntyre, of Craigs Investment Partners, formerly ABN Amro Craigs, said trading during the past year was "exceptionally volatile" for the listed resource companies on the NZX, following two years of record metal prices around the world.
"The volatility in shares were all wild swings as the market came to grips with the crescendo of the market lows reached in March," Mr McIntyre said.
During the year, East Otago-based Oceana Gold's share price ranged from 22c to $1.78, Heritage Gold from 1.3c to 3.8c, Glass Earth Gold from 5c to 20c and specialist West Coast producer Pike River Coal 67c to $1.93.
Oceana and Pike River had raised respectively $30 million and $41 million in capital, helping underpin cash flows, while Glass Earth has indicated it may seek up to $1.4 million later this year as its capital runs down with exploration costs and it plans to move into relatively small-scale gold production in Central Otago.
Mr McIntyre said mining companies had been plagued by production delays during the year.
Control of costs and managing working capital were common themes as they grappled with shareholder expectations and inevitable work flow disruptions "which are part and parcel of the mining industry", he said.
When real demand for metals recovered, with an expected upswing in the business cycle in 2010, restocking of the depleted manufacturing supply chain would likely accelerate demand and "supply and demand" fundamentals, which would once again drive the metals market.
"We remain positive on gold equities given their often noted safe-haven status and forecast that gold prices will remain buoyant," he said.
Underpinning buoyant gold prices would be the heavy government fiscal stimulus from around the world, investment increasing in both the retail and professional level, and a recent pick-up in purchasing by the Indian gold market.
Craigs was taking a long-term view and bullish stance on base metals, with copper and zinc its preferred exposures, but noted the outlook for metallurgical coal markets was also strong.
Mr McIntyre cited a rebound from a combination of a stronger than expected return of traditional (non-Chinese) customers to the market, ongoing Chinese buying causing supply concerns, while more rail issues in Queensland were keeping the supply side of the market tight.
Overall, the global commodities sector was likely to benefit from a weakening US dollar, global demand recovering and also a greater use of exchange traded funds, which meant easier access for investors and creation of demand, Mr McIntyre said.
