While 2013 was a troublesome year for the small-cap mining and exploration sector worldwide, Director of Natural Resources at Westpac Institutional Bank, Mr Todd Ross, expects the sectors fortunes to change by the end of the year.
Mr Ross said an increase in commodity prices should see markets improving over the next 12 months. “As things improve overseas, the market should start valuing these companies back to where we expect to see them.”
Speaking ahead of the RIU Explorers Conference next week, Mr Ross believes small cap companies should be looking towards alternative sources of capital to fuel M&A activity. “We are seeing a shift in trend from traditional sources of capital towards things like commodity streaming and pre-payments.”
In addition to quality assets and projects and reducing costs, small-cap companies utilising alternative funding could fuel consolidation in their given sector.