Spending some days in Toronto in late October, during what was hopefully the height of the global financial meltdown though many financial analysts suggest we may not be so fortunate, was an interesting time to be speaking to junior exploration and development companies.

Their stock prices had been decimated and many of those with cash in the bank were being valued at below this cash value. Certainly no one was in sight willing to provide juniors any debt funding. Analysts were divided on whether it was reasonable to assume that some 50% of mining exploration juniors would cease to exist in the near future, though the division was only on the percentage.

I spoke to some eight junior mining exploration and development companies in Toronto, all focused on Africa, many of them with track records on the continent exceeding a decade, and it is fair to say all of them were focusing on their survival plans. The plans vary. For those juniors that have capital from recent fund raising exercises the plan is to slow down the rate of cash burn, by exploring more slowly and hoping the markets will have cleared in some 12 to 18 months.

Banro, a long term survivor which in the past has sat out a civil war in the DRC and now has some near term gold projects, has cut its helicopter usage in the DRC from three to one and has suspended its drilling campaigns there. It is also likely to focus on a cheaper heap leach gold project which can be in production much sooner and be financed at a much lower cost. That is typical of what is happening across the board among junior exploration groups in particular, with drilling programmes being postponed indefinitely.

James Hershaw, the CFO of Simberi Mining Corporation, a group that is developing the Kakanda project in the DRC and which focuses on projects with near term production potential, states the obvious when he notes that in this market funds are less accessible for groups without production.

Those juniors used to working on tight budgets can argue they are better placed. One such is newly listed New Dawn (better known in southern Africa as Casmyn), which finally had to shut down its Turk mine in Zimbabwe to await further developments in this country. Others, like Simberi, argue that finance will still be raised for projects that are good enough, only it won’t be as cheap to raise such funds as before. Others again, like North Atlantic, an explorer in Mali, claim not to be worried, as in the very worst case they will be supported by strong backers. Some have put a positive spin on the slowdown, saying that it gives more time to relook at significant amounts of data and reanalyse their geological models. More than one company has invested in an auger drill to do low cost soil sampling and increase knowledge of key properties that way.

Some juniors though, which are unable to raise funds for drilling campaigns, have been forced to stop frustratingly short and may have to do a deal at an inopportune time for them, possibly sell at least one attractive project just to survive. An example is Midlands Minerals, which has an attractive looking project in Ghana near the Newmont Akyem orebody but is cash strapped and is looking for a palatable deal.

Whereas in the recent past juniors had to beg drilling companies for slots, now drills stand on site waiting. With the juniors having seen their ability to leverage equity shrink, good undervalued properties, some well advanced, are now available at bargain prices. For those industry players with the appetite and funds, it is a good time to be out shopping.