[miningmx.com] — DESPITE steady commodity prices, financing remains a challenge for junior miners, and a sluggish M&A environment means many projects face a long road to development, a financing panel told the Reuters Global Mining and Metals Summit, according to a report by the news wire agency.
While high-grade projects in stable jurisdictions are still a good bet to find money, lower-grade projects that would have been a slam-dunk just a few years ago are facing a grim market, Reuters reported on Wednesday.
“From my perspective it’s virtually non-existent,” Krisztian Toth, a mining M&A lawyer at Fasken Martineau, said of the potential for equity financing, traditionally the go-to way to cash up a junior explorer.
While gold and copper prices are at historically high levels, junior mining stocks have lagged and traded in sluggish volumes that deter investors who may want to unload shares at a later date.
“That causes a lot of these junior explorers to hesitate when it comes to raising additional monies, because their valuations are so low and they don’t want the dilution,” said Michael White , chief executive of junior-focused IBK Capital.
The cheap valuations would normally be expected to lure senior miners looking to fill up their project pipeline.
But larger players have been picky of late, which experts said is partly due to the fact that many have full project pipelines and worry about cost overruns at new projects.
