Is there a future for Crypto-capital while some green shoots are just starting to emerge in the equities sentiment for resources after global grass roots funding for mineral exploration sank to an all-time low in 2018?
Chairing a session at the three day Paydirt 2018 Africa Down Under mining conference in Perth, PCF Capital Principal, Liam Twigger, said 2018 had proven a challenging year from a market perspective for mineral explorers, developers and miners.
Twigger said that following on from an excellent 2017, where there were 24 exploration-based Initial Public offerings (IPO) in Australia – the figure had plummeted to only eight so far this year.
“On a long-term trend, global grass roots exploration is at an all-time low, with market observers pointing to a 66% decline in exploration budgets over the past four years,” Twigger said.
“This has been mainly due to the lack of access to risk capital.”
Twigger told the 1,400 Africa Down Under delegates that there were, however, major forces at work that have the potential to reshape and redefine the funding of mining companies in the years ahead.
“Compliance and regulatory burdens have seen the number of listed companies in the United States drop 50% from 8,000 to just over 4,000 over the past 10 years and the decline in IPOs across all industries has been a notable worldwide phenomenon,” Twigger said.
“Like running water, in the long-term, capital will always find a way around obstacles and the US$18 billion raised in crypto currency ICO’s over the past 12 months – almost 50% of the amount raised by global IPOs – is testament to the change in dynamic.”
Twigger said that for the first time ever, crypto currencies were now being used to raise capital for the mining sector with approximately US$200 million raised over the past 12 months.
“Crypto funding is attractive due to the speed and volume of funding available combined with access to a more global and retail investor base,” Twigger said.
“Raising capital for mining companies is at an inflection point.
“We are about to witness an Uber-style event on the way resources companies fund themselves with the concept of companies issuing shares to raise equity potentially being a thing of the past.
“Importantly, Australian companies that are active in Africa are the best of the best, with excellent exploration development and operational skills combined with a strong community focus,” Twigger said.
“They are also exhibiting a trend to be early adopters of new mining technology and financing methods and I am confident therefore that they will be amongst the first to embrace crypto funding for mineral development in Africa.”