Toronto, Canada — MININGREVIEW.COM — 06 October 2008 – The number of publicly-traded junior mining companies is likely to decrease as tight credit conditions and plunging commodity prices force explorers to either find deep-pocketed partners or disappear.
Speaking at the Toronto Resource Investment Conference, equity analyst and ‘Bottom Fish Report’ publisher John Kaiser said smaller mining players with proven resources or production had the best chance to survive the recent shift in market conditions.
Reporting from here, Reuters quoted Kaiser as saying: “What we are going through now is a winnowing of the 1 500 companies that are out there.” He was referring to small explorers who mostly trade on Canada’s resource-dominated TSX Venture Exchange.
“Only the ones with truly competent management … and ounces and pounds in the ground that are worth defending from predators or worth keeping, will survive,” he added.
Reuters reports that resource stocks have been hit particularly hard in the recent stock sell-off, with smaller players bearing the worst of it as tight credit conditions have forced some to cancel or delay building mines. It adds that the TSX Venture Exchange composite index – which tracks companies on Canada’s junior stock market and is largely made up of mine exploration companies – is down more than 51% since mid-June.
“The bright spot for miners who are able to stay independent,” said Kaiser, “is that the clearing out of smaller players and delay of some projects will pinch metal supply in the longer term, which should drive resource prices higher. “We might see a period of metals taking off again and spiking to crazy levels,” he concluded.