A long-standing veteran of the mineral exploration business, Harry Barr attributes his roots in mining to a gravel quarry in Ontario that his family has owned and operated for several generations.  However, it was upon his graduation from university in 1979 that he was first truly initiated into the more colourful arena of the global mining industry. That was when, at the relatively tender age of 23, he was shipped off to the jungles of Columbia to manage a placer gold mining operation.

 

Almost a quarter of a century later, Mr. Barr’s well-informed and articulate soliloquies on the state of the ‘boom or bust’ mineral exploration business attest to a wealth of experience gained over the years.

 

With gold trading at around US $410 an ounce, SmallCapMedia asked Mr. Barr why he thinks mining stocks are languishing at this time, instead of benefiting from the buoyant price of the yellow metal.

 

“It’s true that gold prices seem to drive the mining industry,” he says. “But investors are jittery. Uncertainty over the (upcoming) US election, the falling US dollar, and the fact that the US economy is in trouble are all factors that are keeping stocks down.”

 

However, with tangible assets such as precious metals traditionally acting as a hedge against a devalued US dollar, the resource sector is primed to capitalize on this scenario, he adds.

 

“Increased demand for platinum and gold as ‘safe haven’ investments, particularly from emerging economies like China and India, should benefit the resource sector. For this to happen, we need to see metal prices stay at these higher levels for the next year or two.”

 

Along with sustained high precious metals prices, the other key catalyst to propelling mining stocks higher is the need for one of more major discoveries, Barr suggests.

 

“In particular, we’re looking for a very significant discovery with the potential for many juniors to stake around it to generate an important ‘area play’. And this has to happen where there is the availability of plenty of land to stake,” he adds.

 

And only a few places on the planet offer such opportunities, along with stable political climates and well-respected mining laws. They include Canada and Mexico, which are still under-explored, as well as the expansive mineral-rich US states of Alaska and Nevada.

 

With the spring/summer exploration season now winding down in North America, Barr expects the kind of world-class discoveries that the resource sector is so anxiously awaiting to present themselves in the coming months.

 

After all, the mining sector languished for four years after the Cdn. $5 billion Bre-X scandal of 1997 during which time very little meaningful exploration took place. But the stage has now been set for some ‘headline-grabbing’ developments in the coming months, especially after speculative money flooded back into the resource sector between September of 2003 and the spring of this year, he says.

 

Up to Cdn. $4 billion was raised in the public markets during that small ‘window of opportunity,’ giving a couple of thousand mining juniors the war chests needed to finance their best projects (some of which have been idling for a few years).

 

Barr is cautiously optimistic that this major ‘shot in the arm’ for the exploration sector of the mining industry will yield enough discoveries to revitalize most of the better managed junior mining stocks by the spring of 2005.

 

And with a gold price that could gradually climb to around US $500 an ounce by the end of next year, Barr firmly believes that a secular bull market for mining stocks could present investors the kind of opportunities that will be hard to find in an otherwise lackluster broader stock market.

 

As the president of a platinum exploration company, Pacific North West Capital, Barr particularly favours the prospect of a significant platinum find as the key to lighting up the resource sector.

 

He states that platinum, which is trading at its highest levels in about 25 years, is underpinned by much stronger fundamentals that gold. Indeed, a global supply shortage is presaging a burgeoning need for more discoveries of this rare metal. This scenario has been created in recent years by a platinum-hungry automobile industry. At around US $860 an ounce, this metal is needed for pollution control by way of catalytic converters, as well as environmentally-friendly fuel cells.

 

Furthermore, a surge in demand for platinum in the jewelry industry, particular in Asia, is creating “tremendous demand, especially in the form of platinum wedding rings with embedded diamonds,” he says.

And this supply-demand imbalance is not likely to ease up any time soon because platinum discoveries tend to be few and far between, Barr points out. Moreover, the world's two largest producers, Russia and South Africa, are both encountering production problems that are mainly related to depleted supplies and huge infrastructure costs.

That’s why Barr believes that an important North American platinum discovery could easily create a major area play, as well as triggering a stampede among investors back into junior mining equities.

 

All told, Barr is confident that the first few months of 2005 will infuse some much needed sizzle back into the junior mining sector, which he believes will then trend upwards for at least a couple of years. 

“We just need one major discovery, ideally in Canada or the US that will change everything. That’s what the investment public is waiting for. And then we’ll see the market up and kicking again. I’m confident it will happen.”