Executive Director's Blog

Signs of a shift?

Oct 13, 2015

If you’re involved in mineral exploration and development, then you frequently hear the words “it’s a tough time for the industry right now.” It is an accurate statement. Raising capital is a challenging environment to be in—all the reports and analysis tells us so. Yet despite all the negative commentary, advanced and highly promising projects continue to be financed.

A mineral financing mid-year review published in the latest PDAC Core magazine shows that as of June this year, 30 per cent (almost $4 billion) of TSXV market capitalization in mining was wiped off the market compared to the same period in the previous year. The senior exchange, the TSX, fared only marginally better—market capitalization in mining fell by 18 per cent, or $48 billion.

With these statistics, it is easy to believe our entire industry is stuck in a state of doom and gloom. But this is not the case. Spending is occurring and Canada`s exploration sector is most definitely still open for business. The difference, in comparison to some of the more prosperous years previously, is that investors are using their money far more cautiously. That doesn’t mean opportunities have disappeared.

PWC’s 9th annual junior mine report Time for Change says that Canada’s juniors "are a determined lot, used to high risks, tight budgets and business uncertainty.” In 2015, the Top 100 junior miners raised $515 million in new equity financing.

I attended the Precious Metals Summit in Beaver Creek, Colorado. Of the 534 delegates on hand, the highest number to date, a record 220 were in the business of fund management, including corporate development executives from senior and mid-tier producers. Of the 111 companies present over $1 billion had been raised in the prior 12 months. In the micro-cap session, which PDAC moderated, the presenting companies had collectively raised $10 million in the prior two months.