http://www.theaustralian.com.au/business
The way veteran minerals economist Richard Schodde from MinEx Consulting sees it, the junior explorers are the cockroaches of the market in that they seem to be able to survive nuclear winters.
Which is just as well, given that there has been no joy for the sector on the commodity price front of late.
The economist in Schodde backs up his assessment that the juniors are supreme survivalists with some hard numbers from an in-depth study, all of which is posted on MinEx’s website (http://www.minexconsulting.com/publications.html).
Basically, Schodde says that most junior companies will weather the current downturn. Shareholders might not be enjoying the experience but at least their bits of paper will continue to be worth something. Pick the right juniors, and they could even make serious money.
In the study, Schodde compiled data on the cash position and market capitalisation status of no fewer than 1980 junior companies in Australia, Canada and other mining market jurisdictions. It showed that one in five Australian junior explorers have less than $200,000 in the bank. The good news in that for ASX-listed players is that the story in Canada is worse, with 50 per cent of the juniors there having less than $200,000 in the till.
Schodde says that while bank balances may be depleted, a more important metric for assessing ongoing viability is to look at a company’s market cap.