Price Waterhouse Cooper (PWC) published a review and analysis of the top 100 companies on the TSX-V (Venture exchange). It shows some startling information about the turbulent times faced by junior mining companies. PWC is a major world-wide accounting and business consulting firm with top-notch expertise in junior mining finance.
Canada is home to some 60 percent of the world’s public mining companies, with the TSX Venture Exchange providing a source of capital for junior mining companies. Equity financings by the top 100 juniors fell 41 percent to just $1.6 billion, in the 12-month period ended June 30, 2012, down from $2.7 billion in the year-earlier period, according to PWC.
Amazingly, 90% of the world’s equity financing in 2012 for mining companies took place on the TSX or the TSX-V.
Some other interesting points on the report (concerns top 100 TSX-V companies only) :
It’s a very tough market for junior miners and their investors. In the last two years if you want to end up with a million dollars in a junior mining company, invest $2 million and wait a few months. The average stock values of the top 100 miners has declined from $206 million to $117 million from 2011 to 2012. Ouch.
For many junior exploration companies they attempt to prove up enough resource to attract a buy-out from a larger company. Big fish eats little fish. The quest for shareholder value involves not just the quest for resources, but also the quest for talent, for partnerships (with First Nations and community leaders), for societal license, for regulatory approvals, for infrastructure as well as capital.