Sluggish markets weigh on Canada's junior miners

Mon Nov 5, 2012 5:34pm EST
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* Market caps of top miners on TSX-V down 43 pct in 2012

* Equity financings fall 41 percent

* Juniors eye more stream deals, foreign investment

Nov 5 (Reuters) - The value of the top 100 mining companies on the TSX Venture Exchange has nearly halved in the last year, making it increasingly difficult for junior miners to secure financing through traditional means such as debt or equity offerings.

As a result, Canada's smaller mining companies are turning to alternative forms of financing to fund growth, a PwC report released on Monday said.

"Investors are skittish; wary of the volatile market. They aren't looking to add more risk to their portfolios," the Junior Mine 2012 report said. "Unfortunately for juniors, this is their 'sweet spot.'"

Canada is home to some 60 percent of the world's public mining companies, with the TSX Venture Exchange providing a source of capital for junior mining companies.

Despite historically strong metal prices, the broader mining industry has sagged this year, as slowing growth in China and economic uncertainty in Europe and the United States weighed on investors. The cloudy outlook has hit smaller miners particularly hard.

Equity financings by the top 100 juniors fell 41 percent to just C$1.6 billion ($1.6 billion), in the 12-month period ended June 30, 2012, down from C$2.7 billion in the year-earlier period, the report from the global tax and accounting firm said.   Continued...