Why Canada’s ‘orphan’ mineral explorers are struggling despite surging commodity prices – by Gabriel Friedman (Financial Post – August 26, 2022)


Many junior companies remain stuck in the doldrums during one of the best nickel markets in years

On Tuesday, Volkswagen AG chief executive Herbert Diess travelled to Toronto to meet with Industry Minister François-Philippe Champagne. After months of emails, texts and meetings in Germany, Deiss rewarded Champagne’s persistence by crossing the Atlantic Ocean to sign agreement that signalled VW’s interest in investing in Canadian mining and exploration companies — a sign that plans to turn Canada into a major player in the electric vehicle industry may amount to more than hype.

While Deiss made no firm commitments to invest in Canada, the agreement marked the latest effort by a Western government to forge closer collaboration between automakers and mining companies, amid growing concerns about dependence on China for much of what’s needed to make batteries.

Yet in Canada and other Western countries, many prominent junior exploration companies searching for nickel, copper and other metals critical to the energy transition are struggling to raise funds, even though the metals they aim to produce are trading at elevated levels amid the EV frenzy.

The disconnect between soaring commodity prices and drooping valuations in Canada’s junior exploration sector — especially as China’s battery supply chain thrives — has left many top executives sapped and pessimistic.

For the rest of this article: https://financialpost.com/commodities/mining/why-canadas-orphan-mineral-explorers-are-struggling-despite-surging-commodity-prices