Is it timing, spending or just having guts?
HALIFAX, NS (MINEWEB) – Maybe it’s an Australian knack for stomaching awful things. Vegemite. Bloodied juniors.
Richard Schodde, Managing Director of MinEx, a small but powerful mining research firm out of Australia, always has some interesting slides in his presentations. In one of his latest he drew a picture of the diverging fate of two patients: ASX and TSX/TSXV exploration juniors.
Australia and Canada have long dominated global exploration (though China is rising.) But the Australians – nursing deep wounds to be sure – are still faring much better than Canadians.
The comparison drew Schodde, on the road in New York, into a 30-minute talk on Friday morning before his hotel’s house-keeping kicked him out of his room.
The basics
Proportionally-speaking, Australian exploration juniors have healthier (albeit still very stressed) cash reserves than Canadians.
That the juniors are in an abysmal state, cash-wise, will come as no surprise to anyone following the sector. But the yawning gap between ASX and TSX/TSXV juniors may.
As of mid-2014, the Australians have a fair amount more cash than Canadian outfits and equally or perhaps more critically, haven’t sunk (yet?) to as near embarrassing marketcap depths.
Consider the cash. Just over half of ASX junior exploration companies have under A$1 million (which is roughly equivalent to the same in Canadian dollars). It’s nearly three quarters of the those on the TSX/TSXV. More daunting: only one in five ASX junior explorers have less than A$200 000 – hardly an amount of money you can do anything fruitful with.
But half the TSX/TSXV juniors are below A$200 000 in cash reserves.
This is an awful state of affairs. It reflects a low in cash reserves not seen since after the Bre-X scandal in the late 1990s that decimated the junior exploration sector (using Schodde’s calculations in constant 2013 dollars). In fact it’s slightly worse.
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