The organizers, International Investment Conferences, claimed comparable attendance figures to 2008’s number of more than 5,000 people, and the event did have its usual bustle, but the hype of 2008 was absent.

In 2008, the auditorium where South Africa’s Minister of Mines Buyelwa Sonjica gave one of the keynote addresses overflowed; seats were unavailable. In 2008, Sonjica’s keynote address was followed by that of Anglo American CEO Cynthia Carroll. Carroll fawned over a minister who attributed to unanticipated economic growth the country’s electricity crisis that limited the power available to mining companies. In spite of this, Sonjica disingenuously claimed that the country’s economy would to grow at an unlikely 6% a year.

A year later Sonjica, in the same but now half-empty auditorium, said that South Africa’s economy remains largely reliant on mining and referred to lower demand for commodities, scaling down of production and the realities of retrenchments. It was a more sober speech, in which Sonjica highlighted the government’s infrastructure building program.

In 2009, the minister’s speech was followed by a keynote address that more than one attendee of the Indaba considered the highlight of the conference’s speaking program. It was a not a speech by a mining industry insider, nor was it directly about the mining sector. Russel Mead, senior fellow for U.S. foreign policy, reminded delegates that bubbles and crashes have been a consistent part of the last 300 years of humanity’s progress up the curve of freedom and prosperity.

There are two types of crisis, he said, the most common being those he termed stupid banker crises, where bankers lend money unwisely. More serious is the second type of financial crisis which results from a mismatch in the structure of the global financial system. This financial crisis is one of the latter; large pools of capital have been created by export-oriented Asian economies with much lower rates of consumption at home compared with those countries being exported to. That and the creation of other large pools of capital, such as those held by OPEC oil producers, saw money spent on expansion of manufacturing capacity in places like China based on predictions of rates of demand that are not sustainable.

Mead said that the excess manufacturing capacity will have to work its way out of the system and this means a substantial period of weak demand for commodities in general. The upshot, the message the mining industry was listening for, is that it is now very important to be a lowcost producer.

A year is a long time. Bankers and investors were far less visible at the 2009 Indaba than at its previous few incarnations; far more apparent were service providers, such as drilling companies, seeking business that in 2008 they were turning away.

However, Indaba while sober was by no means downbeat. For one thing, there were among the survivors projects like Tenke Fungurume in the Democratic Republic of the Congo (DRC). Tenke has long been regarded as the largest known rich undeveloped copper deposit on Earth (2.65% copper, 0.35% cobalt). Of the 60 or 70 project developers active in the DRC, at least two-thirds have suspended activities and/or withdrawn completely, which means the ongoing projects stand out more brightly.

The Tenke project, located some 180 km northwest of Lubumbashi, is due to enter commercial production during the third quarter of 2009. The $1.75-billion project, 57.75% owned by Freeport- McMoRan, 24.75% by Lundin Mining and 17.5% by Gecamines, can initially produce almost 115,000 mt of copper and more than 8,000 mt of cobalt annually. Freeport’s ultimate goal is to have mining, processing and support facilities at Tenke capable of producing 450,000 mt/y of copper for 50 to 100 years.

However, most of the highlights at Indaba 2009 featured gold companies. One of the long-time Indaba attendees, Australia-based Centamin, is building the Sukari gold project in Egypt. This project, located 23 km from Marsa Alam on the Red Sea coast, has a 12-million-oz resource, one of the largest such resources outside the hands of the world’s major gold mining companies.

Blasting operations are under way for the initial open-pit operation with ore being stockpiled ahead of the scheduled completion of the process plant in the second quarter of 2009 at Egypt’s first modern gold mine.

The mine will initially produce 200,000 oz of gold a year, but this is not where it will stop. Centamin has closed the tender for the construction of the underground operation at Sukari and is expected to begin the development work on the underground project by mid-2009, and after the second year the underground mine could be producing between 200,000 and 300,000 oz/y of gold.

Another gold company highlight at the Indaba was Randgold Resources. The best performing company in the FTSE 100 last year coincides its annual results presentation with the Indaba. It is ramping up its major new underground mine at its Loulo complex in Mali which produced 260,000 oz in 2008, having just commenced construction of its Tongon mine in Cote d’Ivoire which will achieve production of 300,000 oz/y in 2011. It is doing all this while furthering work on a major new discovery, Massawa, in Senegal.

Randgold Financial Director Graham Shuttleworth says that in 2008 the company spent some $20 million on exploration, and unlike others, Randgold does not plan to cut back on this budget. Shuttleworth also suggests that for the first time in many years merger and acquisition options may be more attractive than Randgold, a very successful explorer, doing its own greenfield exploration to source gold ounces.

Illustrating the lack of funding available to exploration groups, even in the gold space, is Zambia’s leading primary gold project. The market downturn came at a bad time for Luiri Gold, which has defined 800,000 gold ounces at its Luiri Hill project, located about 120 km westnorthwest of the capital Lusaka.

Typically for a gold project to gain the required economics of scale for production costs it needs to define at least a million ounce deposit, which would give it about a 100,000-oz/y operation with a reasonable life-of-mine.

Luiri Gold CEO and President Mike Sperinck believes Luiri was on the verge of developing a strong gold asset. Now the company will have to look to make a deal. It could be with a small producer already operating in the 100,000-oz/y range that may want to expand its resource base, or it may be with a junior that has cash but no advanced assets. Or Luiri could be a takeover target of a mid-level company looking to build a pipeline of advanced projects.

Luiri Gold could also undertake a go-italone option and develop a small open-pit project to mine the high grade portion of the orebody to make up for the higher operating costs. That would entail mining some 300,000 to 400,000 mt/y at a higher grade to achieve in the order of 50,000 oz of gold production a year.

Such an option is achievable with low capital expenditure, though is not ideal in terms of developing the company and the orebody, and Sperinck does not want to pursue that route unless absolutely necessary. It is a survival strategy, though.

A third option would be to batten down the hatches and wait for an economic upturn. Sperinck thinks that is a bad idea, believing it is in downturns that the better projects are able to progress and, with the chaff blown away, it provides opportunities for those able to pursue them. The gold price environment is suitable for gold projects at the moment, and Sperinck does not believe shareholders would thank him for doing nothing and waiting it out. “Also we can now get contractors to put their A teams on the project,” he said.

That the space for exploration is no longer a comfortable one is also illustrated by the type of producer Sperinck is trying to attract. Small gold producer, Pan African Resources, which has a 100,000- oz/y operation near Barberton in South Africa has walked away from its early stage grass roots exploration projects. It will only look at projects that offer it near term production. “We are now a mining company, not an exploration company,” Pan African Resources CEO Jan Nelson said.

A year ago, Pan African Resources looked like a typical junior gold explorer with a small production base and large ambitions. Nelson’s change in strategy underlines his belief that these days cash, and thus cash generation, is king, and while the company was originally talking about being a 500,000-oz/y producer in five years, he is no longer sure that is the right approach. “Our approach now is to pursue high profits, not high volumes.”

However, Nelson admits that low-cost, high-margin projects are not easy to find, and the company looks at some 15 projects a month and assesses hundreds of opportunities. “We are seeing a lot of the same. There are a lot of 500,000- to 700,000-oz deposits out there with 1 to 2 g/mt grades. What we are looking for is the one that gives us 2 million ounces at 8 g/mt.”

For now, Pan African Resources is focused on ensuring that its Barberton production remains in good shape, maintains its grade and does the development to ensure it remains a steady 100,000- oz/y producer. “And, while it is not popular to talk about it now, it might make sense to perhaps hedge our production if the gold price ever reached levels of US$1,500/oz.”.