Junior market capitalization have sunk hard leaving some juniors sitting on hefty cash piles. Meanwhile some analysts suggest it’s time for investors to start hunting.
HALIFAX, NS (MINEWEB) – For juniors overall 2011 and 2012, so far, have been a veritable plague. Many a junior market capitalization has painfully shrunk. There are often individual reasons beyond general market malaise for that pain, of course. Some juniors have disappointed (former) investors with lackluster plans for minerals assets. Some may be in project development periods that are too boring for the gambler. But beyond those and other individual causes, it is hard to ignore the greater downward pressure on speculative investing over the past year or so as paramount. And this plague – symptoms of which include feverish risk aversion – has left some members of the broader junior population with, relative to market capitalization, fatty stores of cash.
In a non-comprehensive selection of junior explorers holding cash worth at least 20 percent of their market capitalization – compiled over the course of a few hours research – you’ll find some truly astonishing figures. One junior, Gobimin (TSX-V: GMN), with a market capitalization around C$44 million held some $60-odd million in cash at last count (late last year.) Meanwhile seven other junior explorers on the list held, or were set to hold, cash worth more than half the value of their market capitalizations: Canaco Resources (TSX-V: CAN), Canada Fluorspar (TSX-V: CFI), Keegan Resources (TSX: KGN), Metalex Ventures (TSX-V: MTX), Southern Arc Minerals (TSX-V: SA) and a merged Regulus Resources (TSX-V: REG) and Pachamama Resources (TSX-V: PMA, merging now unfolding).
good number of other juniors were not far behind. Allana Potash (TSX: AAA) held C$55 million cash as compared to a C$113 million market cap. Prodigy Gold (TSX_V: PDG), after a recent financing, will hold some C$63 million cash versus its C$188 million market capitalization. And Exeter Resource (TSX: XRC) has about C$72 million in its kitty and a market capitalization of C$225 million.
A quick look at a few junior producers tells a similar tale of deflated market capitalizations versus inflated cash piles. Nevsun Resources (TSX: NSU) held at least $347 million in cash, about 60 percent its C$578 million market capitalization. Capstone Mining (TSX: CS), with a market cap just over a C$1 billion, had nearly half that in the bank.
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