CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
Close to 1,000 Australian junior mining and exploration stocks will be fighting to raise billions of dollars in new equity in 2013, just as investor interest in the sector fades, reports The Australian (subs. required).
According to the newspaper, the mining boom drove investments in speculative stocks boom. As a result, the Aussie Stock Exchange added 44 resource companies this year, bringing the total to 991, most with a market capitalization below $100 million.
But low returns in the sector sent investors back into blue-chip dividend stocks.
John Robertson, a director at EIM Capital Managers, estimates that nearly 300 junior resources companies that have joined the ASX in recent years need to secure about $2 billion a year to maintain their businesses, carry out basic exploration and cover listing fees and other costs.
“Over the last few years we’ve had several hundred more companies come to market, and at the same time the availability of capital has shrunk. You’ve got around 50% more of these juniors chasing a shrinking pool (of capital), so the maths just doesn’t work,” he told the media outlet.
“It can’t be done. That’s the reality.”
The expert also expects the poor climate to hit new resources listings in 2013.
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Comments
David Collins
This is a pretty scary article with big implications for all miners. It appears that miners with a healthy cash balance will have a significant number of potential acquisitions in the next year. The article is similar to the recent JUMEX (junior mining and explorer) survey by Grant Thornton, which found that 68% of miners surveyed expected to raise funds in the next six months and 64% had less than $5m cash on hand. You can read the entire survey here: http://www.grantthornton.com.au/files/jumex_report_2012.pdf
David Collins
http://www.costcurve.com.au