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TORONTO — As the beleaguered mining sector suffers through another year of its deepening slump, the industry’s boom days are but a distant memory.
It’s an ugly time for the junior mining industry, as companies descend on Toronto for the annual Prospectors and Developers Association of Canada conference. Already starved for cash, small mining companies are facing their fourth consecutive year of declining commodity prices.
Since 2011, gold is down 30 per cent. Iron ore and metallurgical coal, both used to make steel, are about 70 per cent lower. Copper is down 40 per cent and nickel is off by 50 per cent. Shares of a slew of junior mining companies have crumbled to just a few pennies apiece.
The downturn has made it much harder to entice investors. Don Hoy, who discovered the large chromite deposit in Ontario’s Ring of Fire mineral belt, said investors’ attitude toward small mining companies has changed.
During the commodity boom several years ago, Mr. Hoy said “people did not want to miss the boat. They had to get involved.” But, “a lot of projects were far fetched,” he said.
“Now, investors are much more sophisticated. They want to see good assets and good management,” said Mr. Hoy, whose company, Wolfden Resources Corp. is down to two people, including himself.
A handful of junior miners, such as Probe Mines Ltd., have been swallowed up by much larger mining companies. Some have been forced to throw in the towel. All have done the requisite cost-cutting and are trying to get funding to continue exploring and developing their projects.
At the conference, some miners have decided to save money by not paying for a booth and instead will walk around with their projects in their briefcases.
Still, some investors say it’s times like this that bargains can be found. Long time resource investors Lukas Lundin and Rick Rule are some of those who will be hunting for mineral projects at the conference.
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