Junior Miners Shares Tumble Along with General Market Weakness - Predators Circle

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"The junior sector's as bad as it's probably ever been in recent history. A number of the junior mining companies are starting to hit the wall," said one London investment banker in charge of mining.

The latest turmoil on financial markets is hitting hard many small mining firms as their share prices slide and funds dry up while bigger rivals with cash are shopping around for takeover bargains.

Over the past few years, investors poured money into a slew of exploration firms and single-mine companies which achieved stock market listings amid a rally in metals prices and easy credit.

But many firms are running out of cash and are unable to raise funds by issuing equity amid a crash in shares while finding the door shut at banks which see the projects as too risky in the current climate.

"The junior sector's as bad as it's probably ever been in recent history. A number of the junior mining companies are starting to hit the wall," said one London investment banker in charge of mining.

The UK mining index has tumbled 45 percent since touching a peak on May 19 and shares of many small firms have slid more than that. In London, many small mining stocks are listed on the Alternative Investment Market (AIM).

"Some AIM miners are in trouble. Nearly half are trading below their issue price and many of those have little cash," said Michael Lynch-Bell, global head of mining and metals transactions at Ernst & Young. "Some have good assets but cannot raise cash... and that makes them takeover targets."

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