Tuesday 20th February 2018

Resource Clips

Chart: Junior miners—Doom, gloom or boom?

PwC report recaps malaise, but recent traction may indicate signs of life

by Jeff Desjardins | posted with permission of Visual Capitalist | October 30, 2015

The Chart of the Week is a Friday feature of Visual Capitalist.

Junior miners: Doom, gloom or boom?

From the PwC report Junior Mine 2015 summarizing the top 100 junior miners
on the TSXV. In the exploration group, there were 63 companies this year.

If it wasn’t already clear, the junior companies that explore, develop and mine the world’s metals are struggling. PwC recently recapped the malaise of these companies in its latest Junior Mine 2015 report, but also highlighted some success stories of those that have been able to bypass the onslaught.

The report, which looks at the top 100 junior mining companies traded on the TSX Venture exchange, had findings that make junior mining executives want to bury their heads in the sand. The average market capitalization of exploration companies is down 51.2% from 2014 to 2015. The amount of money raised in equity and debt markets for exploration companies is down 33.4% over the same timeframe.

Furthermore, the average company on the top 100 list has $7 million cash, which is down from $10 million last year. In 2011 the average cash in the bank was $22.7 million.

Remember, these are the results of the “best” companies in the space. This doesn’t include the zombies or any of the other hurting companies.

Signs of life?

Every coin has two sides, and here’s the other side to this one. Over the last two months, data shows that things aren’t getting worse. In fact, it could even be argued that things are getting better.

Since the end of the “flash crash” that hit markets on August 24, when the Dow dropped 1,100 points in the first five minutes of trading, miners have been up. The TSX Venture is up 4.1%, the GDXJ (Junior Gold Miners ETF) is up 3.9% and the HUI (Basket of Unhedged Gold Stocks) is up 8%. Even more spectacular is the GLDX (Global X Gold Explorers ETF), which is up a solid 17% since the August lows.

This is obviously not anything definitive. However, seeing all four of these major indices up at the same time is a good sign.

Now we just need a rags-to-riches story like that of Voisey’s Bay to get the market really humming.

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