Free Us from the Tumult of 4,000 'Junior' Miners
Source: Stockhouse, Thom Calandra (2/6/09)
"Which of the juniors are going belly-up? Few if any. Most live to raise funds another day."
The roulette wheel of too many mining choices deserves a wide berth, not a spin. Did you know there are 4,000 tickers on that wheel? An investor could spin that wheel once each minute for almost three days running and come up a winner maybe 20 times. Assuming the investor covered enough of the wheel with chips, that is.
Our planet has more than 4,000 junior miners on various venture and alternative market exchanges in Canada, Australia, Britain, the U.S., South America, South Africa and so on. Many sell for pennies. That is not Vegas. Or Macau. Or Gold Coast down under. Or Monte Carlo. That is madness, pure and dirty.
In 2008, nearly every one of the several thousand "junior" miners came to the end of their capital cords. They could not raise money, no matter what dusty province or mid-mountain village they were working. No matter the M&Is and the feasibility studies, the 100%-owned leaseholds on rock or clay or brine or the integrity of the companies' executives and geologists.
The audience that dreams of the ultimate "hit," that prays for the strike that pays the freight for hundreds of millions of shares outstanding, has dwindled, almost evaporated. Garage-loft investors stopped going to the casino months ago.
Gold, silver, platinum, uranium, palladium, copper, nickel – it did not matter. Complete abandonment. Investors stashed their cash. Sadly, the so-called deleveraging of assets (read: dumped) damaged real goods, as well as the pipedreams. Substantial companies with sachets of cash and the best geologists that money can buy were battered.
Thankfully, the real companies bounced back hard in the market. Others, the ones with even larger market worths endured the October and November dumping and now sell for three times their price.
On the junior front, whilst some of those 4,000 have genuine prospects, few if any are being winnowed. Which of the juniors are going belly-up? Few if any. Most live to raise funds another day. The 4,000 still "sell" their stories and their shares. Or recreate themselves with reverse mergers or asset swaps, private placements and other gimmicks.
Perhaps this is the wisdom of markets, the way capital markets gauge risk and reward mining success. Place the correct wager and the returns can be stellar.
Now, I have a soul and a heart. Bankers need to make a living. Student geologists need to intern somewhere. Directors need to direct. Venture stock exchanges need to venture. Project 'permitters' need to permit. But some of this is madness, for sure.
Investors have far too many choices in this hard-asset boom that is taking place in most nations. Please, let some of these micro-miners be taken out of their, and our, misery. Only then can our work as diligent researchers and investors qualify not as desperate charity but as elbow grease for vast wealth.