Gold Above $1,350 Is The Cure For Junior Miners – 121 Mining Investment
(Kitco News) – The struggling junior mining sector needs gold prices to trade sustainably above the $1,350 an ounce level to see new money flow in, according to the panelists at the 121 Mining Investment conference held in New York this week.
Latest statistics reveal lack of new investment in the juniors, said Kitco’s very own Daniela Cambone, who moderated the panel dedicated to the precious metals. Cannabis companies raised $4 billion in 2018 in comparison to just $217 million raised by mining companies, Cambone pointed out.
The panel focused on what juniors can do to encourage new capital flows into the industry.
“There is a lack of equity for junior projects,” said Sprott Asset Management senior portfolio manager Trey Reik. “There is a very wide disparity between seniors and juniors when it comes to availability of capital.”
Other “hot” markets, including cannabis and bitcoin, present a better value opportunity for investors, but junior miners can give investors a reason to come back, explained Haywood Securities senior mining analyst Kerry Smith.
“Senior companies are spending more money on grassroots exploration than before because the juniors are not developing the discoveries for them,” Smith said. “To change that we need help from governments. Also, you need to pick your spots and you need to be in jurisdictions where you can work.”
Smith added that he sees the space springing back to life at higher gold prices.
“For me, gold sustainably above $1,350 is the number that will bring capital back into the space. And if it doesn’t stay above $1,350, people will just say that they can buy other things,” he noted.
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Another popular advice to the juniors was to shift their campaign to target the interest of senior mining companies.
“Juniors should re-focus what they should do in terms of exploration. They should be teaming up with others, making themselves a bit more attractive in terms of individual projects, and bringing in mid-tiers into the mix,” explained Commonwealth Bank director of Specialized Finance Alain Halimi.
Reik also spoke in detail about making specific projects more appealing to bigger players.
“If you can position your company properly and make an asset attractive to a specific company, you would get an offer. Financing your own project is too difficult at the moment,” he said.
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