Troubled juniors face reality

It is now being accepted that the hard times facing the junior mining sector is forcing it to accept a new reality.

Change, massive change, is taking place, and that could be a good thing.

The core problem is financing; the present but old way is no longer viable.

It is estimated that one third of the over 1,700 juniors on the Toronto and Vancouver Exchanges will run out of money within two years.

Failing to find ways to raise money not only for exploration but for administration will mean the end of the lives of those companies.

There is light at the end of the tunnel. In fact, there are several lights.

One thing is obvious, costs in every area of every operation must be reduced. Another is to merge several companies to create a much larger entity. Lending institutions might look more favourably on a company with a large portfolio of properties as against one with a single property.

There is the option of selling known deposits to one of the big 10 industry giants. In the present financial environment, they still have the ability to raise large sums of money.

Finally, there is government, the creator of wasteful and inefficient laws and rules that gobble up money.

Canada needs a healthy exploration sector, just as its very economic health is dependent on a robust commodities industry.

Some juniors may disappear but those with an experienced management team, a track record of delivering on its promises, a project close to the advanced stage and a lean, mean costs structure will survive.

The new era we are entering also will see the role of the prospector, both the fulltime one and the weekend amateur, increased.

That could be a good thing as most of the past century’s finds were made by individuals.