Exclusive: Mining industry rushing to raise investment, Reuters survey shows

Wed Feb 26, 2014 12:08pm EST
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By Euan Rocha and Allison Martell

TORONTO (Reuters) - A trickle of new investment into global miners has created a tidal wave of interest among hundreds of small mineral explorers desperate for cash, a Reuters survey shows, setting the stage for a competition to raise funds that some are sure to lose.

The mining sector has been in a prolonged downturn. Only months ago, it was nearly impossible for small explorers to find investors, reducing some companies to raising as little as C$50,000 ($45,100) at a time.

But recent fundraising success for established miners and a few exploration companies like North Arrow Minerals Inc (NAR.V: Quote), Torex Gold Resources Inc (TXG.TO: Quote) and Lydian International Ltd (LYD.TO: Quote) has encouraged many tiny explorers, often called junior miners, that there is a window of opportunity to tap investors.

More than half of the Toronto Stock Exchange (TSX) and TSX Venture (TSX-V) miners and explorers that participated in the Reuters survey said they were "very likely" to seek financing in the coming 12 months, and roughly nine out of every 10 said they were at least "somewhat likely" to tap the market.

The issue is that there still isn't a broad appetite in the investment community for miners, cautioned Jason Attew, managing director of global metals and mining at BMO Capital Markets.

"We are seeing some mojo back in the sector," he said. "But, I do not want to characterize it as a market where every company can get financed. It is very selective with money going to high quality management teams and high quality assets."

Others in the industry like Brendan Cahill, chief executive of silver miner Excellon Resources Inc (EXN.TO: Quote), agree that while money has begun to flow back into the sector, it has mainly gone to the big names and is beginning to filter down to the middle of the pack. But the juniors at the bottom of the field are yet to see much.

"For the exploration plays, other than the ones with the very highest quality projects, things are going to be tough for a while," said Cahill.   Continued...

A Queenston Mining geologist examines the drill core from one of the company's drill sites east of Kirkland Lake, Ontario, October 6, 2011. REUTERS/Euan Rocha