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Crowdfunding one solution, prospectors’ conference told
Junior miners must seek new ways to find investors — including crowdfunding — if they want to survive the current industry slump, analysts told a prospectors’ convention.
A turnaround in metals prices isn’t expected until about 2017, but “that’s an eternity for the juniors,” warned longtime analyst and industry observer John Kaiser on Monday at the Prospectors and Developers Association conference in Toronto.
“We are now in the worst bear market in decades,” noted Kaiser, who is based in San Francisco and has covered the topsy-turvy sector since 1983.
He said the ongoing bear market has been dismissed as a cyclical downturn that will eventually reverse, as it always has. For instance the five-year downturn in the mining industry after the Bre-X gold salting scandal in 1997 was followed by a ‘super cycle’ of 13 years of sky-high metals prices and record share prices.
“While true for majors (big mining companies) whose fortunes hinge on the commodity cycle, it may not be true for juniors,” he said.
That’s because a $140 billion junior buyout “binge” in recent years has left the seniors with ample development inventory, and the big financial institutions need higher metal prices to care about advanced resource juniors “and have little interest in earlier stage exploration juniors,” Kaiser said.
In the absence of a big discovery such as the Voisey’s Bay nickel find in Newfoundland or the Ekati diamond deposit in the Northwest Territories, the small-cap mining firms that are struggling to survive will need to rely more on retail or individual investors to weather the storm – and lots more of them, he said.
He pointed out though that only accredited investors – those with a high net worth – are allowed to participate in private placements, the main funding gateway for juniors.
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