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Thousands of junior mining companies are prospecting for cash so they can keep up the hunt for new deposits amid the downturn in commodity prices. The miners will be doing their best to attract investors at the annual Prospectors and Developers Association of Canada conference in Toronto this week.
A swarm of 25,000-plus miners, financiers and lawyers from more than 125 countries are expected to attend the four-day conference, the world’s largest mining gathering, which started on Sunday.
Funding for miners was scarce last year and the junior firms, which are responsible for the majority of new discoveries, are down to skeleton crews and desperate for investment.
“I have never been through anything like 2013. There were times when there was almost no hope,” said Richard Spencer, who has more than 20 years of experience exploring for minerals and is the chief executive of Toronto-based uranium miner U3O8 Corp.
“You just knew that it wasn’t really feasible to raise enough cash to do anything significant on the projects.”
The market capitalization of the Canadian mining sector dropped to $269-billion in 2013 from $389-billion in the previous year.
On the TSX Venture exchange, where most junior miners get their start, 36 were delisted. Stocks that used to trade above $1 have been reduced to pennies.
The worst part was the dwindling amount of cash on miners’ balance sheets.
The cash position of the top 100 miners on the exchange dropped to $1.2-billion as of the end of June from $1.9-billion in the previous year, according to PricewaterhouseCoopers LLP.
“Without access to funds they can’t get off to the races to do too much,” said Ross Gallinger, executive director of PDAC. “Access to capital is the biggest thing on their minds,” he said.
The industry sees encouraging signs that it will regain favour with investors.
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