Scott Drever, who will be chief executive of the combined company, is also the chief executive of SilverCrest Mines Inc, a small silver producer.įor those juniors that do forge ahead with deals, the payoff could be muted, says Michael White, the head of IBK Capital, an independent investment banking firm that has worked on a range of financing deals with exploration companies over the years. ![]() “We needed to get some skills, people who have done this, starting something at a small scale and moving into a bigger mine.” “We knew we had a great project and you know, the time has been challenging for everyone,” said Tsitos, who will be president of the combined company. Both companies have closed equity offerings since the deal was announced. The combined company will focus on developing Eagle Mountain’s flagship project in Guyana.Įagle Mountain Chief Executive Ioannis Tsitos, who is set to hand over the baton to his counterpart at Goldsource, said their deal connects his company’s project with experienced managers.Ī strong management team can make it much easier for companies to raise the funds needed to explore. “That’s mostly why it doesn’t happen.”Įven so, several deals have been announced in recent months, including one between Eagle Mountain Gold Corp and Goldsource Mines Inc. “Even though their market cap is like $2 million, they say, oh no no, my project is worth $35 million,” he said. ![]() TomaGold Corp, which recently inked a deal with mid-tier producer Iamgold Corp to fund several years of exploration at three projects in Quebec, will be there, and Chief Executive David Grondin said a deal with some other explorer is something he is looking at. More than half the world’s public mining companies are listed in Canada, and the majority are small explorers. Talk of consolidation is sure to bubble on Sunday when the world’s largest mining industry gathering, the Prospectors and Developers Association of Canada convention, kicks off in Toronto. Nearly half the companies for which Thomson Reuters data is available had less than C$500,000 ($451,700) in cash and short-term investments at the end of the third quarter of 2013. While some money has started to flow back into the sector, there are some 1,600 miners and explorers on the Toronto Stock Exchange and its junior board, the TSX Venture, and competition for funds is fierce. Yet after a more than two-year funding crunch, many have scaled back or halted the exploration work that is their reason for being, and without a buyer or investor they could remain in hibernation or even risk being delisted. They drive global mineral exploration and when they succeed, often become takeover targets for bigger players. The fate of the juniors has implications for the broader industry and commodity markets. “Most would rather hang in there and end up with $10 in the treasury and start the game all over again in two years.” They’re dreamers, and they’ll hang in until the cows come home,” said Tom Caldwell, head of brokerage and wealth manager Caldwell Securities. “The guys running these small companies are promoters. Some stocks have dropped more than 90 percent over the last two years, and bids reflect the low valuations. ![]() Several industry leaders have argued that consolidation could fix the sector.īut such discussions often come to a halt when executives at target companies realize that they will have to sell cheap. And the few with strong balance sheets figure there must be some great deals around. Out of favor with investors, most explorers - or junior miners - badly need cash. Just over half the Toronto Stock Exchange and TSX Venture-listed miners and explorers that participated in the Reuters survey said they are at least somewhat likely to announce a “merger of equals” over the coming 12 months, but only a handful said such a deal is “very likely.” TORONTO, Feb 25 (Reuters) - Many of the small Canadian-listed mineral explorers that supply global major miners with new projects are considering merging with peers, according to a Reuters survey, but for most it may be tough to close deals.
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