Neo Battery Metals Ltd (NBMFF)

[LGL8054]

Front Page Feature, Newsletter Reviews
Canadian Junior Mining Companies and Independent Brokers Have a Bright Future


April 4, 2013 by Gold Editor

SOURCE:[The Gold Report] - Haywood Securities Managing Director Kevin Campbell is concerned by all the negative talk about the state of junior mining. In this reaction to an interview in The Gold Report with B&D Capital consultant Don Mosher, Campbell outlines the fundamental demand for commodities behind his conviction that this is a temporary downturn and that the TSX Venture Exchange, the industry and the experienced web of service providers that have built up around it are here toporary, albeit vicious, stay.

The Gold Report: As a managing director of investment banking at Haywood Securities, you're in a perfect position to report on the state of the junior mining financing environment. You called The Gold Report's March 25 interview of B&D Capital Consultant Don Mosher titled, "Strangulation by Regulation—Is the Venture Exchange on Its Deathbed?," alarmist. What is the state of the TSX Venture Exchange? Will it continue to serve the retail investor?

Kevin Campbell: The state of junior mining finance is abysmal. There's no question about that. The traditional sources of capital have all but evaporated over the last couple of years. Companies are seeking alternate sources of funding and in many cases are being successful. These sources include selling metals streams, selling royalties, hybrid debt, looking overseas, and all this is also leading to heightened merger and acquisition potential. The right companies will find ways to get by, but it's undoubtedly tough. Good management teams and good projects are going unfunded at the moment.

My concern is more around the public discussion of an existential threat to junior mining. I just don't believe that to be the case. It is an asset class like any other. It may be more volatile than others and subject to more extreme cycles. And we happen to be in a severe down cycle right now. Nonetheless, I believe that junior mining will remain an integral part of the commodity cycle going forward, and I believe in commodities going forward.

TGR: Are you saying that the challenges the junior miners are facing right now, particularly in finding funding, are simply cyclical? It has happened before; it will happen again and things will pick up.

KC: It all really comes down to flow of funds. The flow of funds from conventional sources has departed junior mining for the time being. But the demand for metals very much still exists. I think it comes down to some basic questions: Will there be more or less people in the world by 2025? Are they going to be more or less urbanized? Is their per-capita metal consumption going to be more or less than it is today? I think the answers point to the direction of enhanced metal consumption and more pressure from the demand side in the face of what has been a fairly anemic supply response thus far. I think there's reason to be optimistic and I think the cycle will see the flow of funds return. It just happens that we are in a trough where a lot of pain has been felt. I don't see any overall structural issue that would prevent junior mining from coming back to the fore at some point after this has all been cleansed and rationalized. One of my mentors in this business was let go from his mining role at a Canadian firm in 2001 with the explanation that mining was a "sunset industry." That sentiment is as nonsensical today as it was then.