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Canada’s hundreds of tiny mining companies have had such a rough ride, with metal prices tanking and financing drying up to a trickle, that some have simply resorted to drugs. Medical marijuana, to be exact.
Canadian resource companies such as Next Gen, Sartori Resources, and, most recently, TSX Venture-listed Cavan Ventures Inc., have floated the idea of a foray into medical marijuana industry, with the buzz often sending their stocks to a (very temporary) high.
Junior miners’ increasing interest in the medicinal plant is “symptomatic of how difficult it has become in this sector,” said John Kaiser, mining analyst and research director of Kaiser Research Online.
It’s similar to the ploys by resources companies in the late 1990s and early 2000s to jump on the dot-com boom amid a similar tough economic environment, he said. “To me it has this smell of an end times type of mentality,” he said. “Where nothing means anything any more, [and] it’s hopeless to raise money for real stuff in the resource sector.”
Interest in the medical marijuana industry, overall, is rising as Health Canada moves to allow licensed commercial growing of medical marijuana on April 1, and as U.S. states such as Colorado and Washington move to legalize cannabis.
Cavan, noticing other miners’ gigantic stock jumps on marijuana-related announcements, on Tuesday said while it was advancing their graphite properties, they were looking to “add significant value through the Legal Medical Marijuana space,” according to the B.C.-company’s president Peter Swistak.
Next Gen’s announcement last month it would diversify into legal medical marijuana and industrial hemp moved its stock from 20¢ earlier this month to 53¢ at Tuesday’s close. Sartori’s appointment of an agribusiness consultant and announcement of interest into medical marijuana last month moved their stock from 4¢ in February to 11.5¢.
Cavan, which according to its latest financial statements said it had all of $13,195 in cash and $328,756 of accounts payable as of Nov. 30th, tried to explain why pot would make a logical extension of its mining exploration business.
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