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Confidence resumes as junior mining market caps reach 2010 levels: PwC

by Greg Klein | November 8, 2017

Cautioning that the market hasn’t fully returned, PricewaterhouseCoopers released data that quantifies the sector’s encouraging mood. As of June 30, TSXV-listed mining/exploration market caps, financings, M&A and IPOs all increased substantially over the previous 12-month period. Calling it a “delicate recovery,” PwC says the numbers show the second straight year of improvement and some of the best results since 2010. Commodity prices get much of the credit, although a more disciplined approach to spending contributed to the positive circumstances.

Junior Mine 2017: Confidence Rekindled examines data from TSXV mining/exploration companies, where almost 1,000 such firms dominate the Venture’s membership and make up 47% of the exchange’s total value and 59% of its trading volume.

The top 100 TSXV mining/exploration market caps totalled $12.2 billion, up 7% from the previous 12-month period. Overall, mining/exploration capitalization increased 18%.

But the numbers compared less impressively with other Venture sectors, where market caps for financial services rose almost 56%, oil and gas 43% and life sciences 95%. PwC attributed the under-performance partly to gold’s levelled-off price.

Treasuries for the Venture’s top 100 miners/explorers rose 74% to $1.57 billion. Those 100 companies raised a total of $2.04 billion in equities, up 174%, and $487 million in debt, up 20%. “But this windfall was unevenly spread, as many juniors continued to struggle to raise financing and more than one-quarter of the total funds went to just four companies”: Cobalt 27 Capital TSXV:KBLT, Leagold Mining (since graduated to the big board as TSX:LMC), Trek Mining TSXV:TREK (expected to merge with NewCastle Gold TSX:NCA and Anfield Gold TSXV:ANF to form an anticipated new company called Equinox Gold TSXV:EQX) and Bluestone Resources TSXV:BSR.

Still, 56 of the top 100 raised over $10 million, seven of them raking in over $50 million.

Spending for the top 100 hit $1.15 billion, compared with $268 million previously. Nevertheless “junior miners appear to be avoiding the temptation of rushing to spend,” the report stated.

PwC quoted Barkerville Gold Mines TSXV:BGM CFO Andres Tinajero saying, “Even though there are a lot of resources flowing around in terms of funding for the juniors, they’re not spending the money as fast as before. So probably, yes, we’ve learned our lesson from the past.”

M&A activity brought more encouragement, as did IPOs. Five of the latter raised $40.2 million. That compared with the previous period’s zero IPOs raising zero dollars.

“We’re not fully recovered from the downturn but we’re definitely on a slow but bumpy ride to recovery,” commented PwC Canada partner Rebecca Chan.

The report is the first of four planned PwC studies examining the industry.

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