News

November 20, 2008

Some Cold November Truths for Canada’s Junior Miners

By Our Vancouver Correspondent

The next three to six months is going to be make or break time for many Canadian-listed junior miners. With the equity markets boarded-up for the foreseeable future, the list of seriously ill or bankrupt companies is about to grow longer. From mid-November on is when market watchers expect to see the Vancouver juniors publishing their third quarter financials. Even a purely cursory look at the numbers that have already come out reveals plenty of cold, hard truths, both for management and for investors. Many companies are now down to their last few hundred thousand bucks – barely enough to keep the lights on and the coffee hot for the next 12 months, and not enough to run a serious drill program or fund an engineering study. Others with large cash piles are burning through it as if nothing’s changed, or else are preparing to cut costs and focus on preserving precious funds. Sensible folk are cutting back wherever they can: producing companies are eliminating non-essential capital expenditures and reducing unit production costs where possible.

Some sectors are going to feel the pinch harder than others. The diamond juniors, who manage frighteningly expensive exploration programs in Arctic Canada, will struggle to fund their air-supported winter drill campaigns. The grass roots explorers will find it impossible to raise more cash if all they can show for their efforts is yet another stream sediment anomaly or hopeful geophysical bull’s eye.

Likewise, the small cap miners who sprang up by the dozen all over Mexico in the last four to...