Today, as Europe sinks into a sunset of unsupportable debt and banks rein in lending, there are two types of mining company – happy survivors and unhappy strugglers.

Cash is the key to the difference. The survivors have it, either in the form of a healthy balance at the bank, or in bullion squirreled away, or ongoing mineral production being achieved at a cost below the market price. They are the happy companies, and cash is the common thread.

Strugglers forgot to raise fresh capital when there was greater risk appetite among investors, forgot to save for a rainy day, failed to develop a mine with costs below the market price for the mineral being produced, or hoped they could raise capital as needed. They are the unhappy companies, and each has a different story to tell.

This final Dryblower column before Christmas looks at four hard luck stories, and suggests that investors look and learn because if there is one thing certain in mining it is that history repeats itself, with the next crop of hard luck stories getting ready to make an appearance in 2012.

Case study number one is Kagara, a base metal miner with shares that once flew as high as $5.80 in the final days of 2006. Last week it closed on the ASX at 29c, a 95% plunge over five tumultuous years of riding the boom, frittering away success, and then hitting hard times.

It would be rude of Dryblower to suggest that Kagara’s problems are an example of management having too much faith in its own ability when success is largely the result of high metal prices, but that is what appears to have happened.

After a few good years at its Mt Garnet mine in Queensland, Kagara thought it would take on the world by spending a small fortune drilling the two kilometre-deep Admiral Bay zinc deposit in WA, a prospect that has proved to be too distant, deep and difficult.

No prize for guessing that Kagara would love to have retained the Mt Garnet profits and not been forced into last week’s discounted $25 million capital raising.

Moral of the Kagara story; try to not believe your own public relations statements, and don’t bite off more than you can chew.

Mundo Minerals is case study number two, and an example of a one-time high-flyer with heavyweight management that suffered from “Napoleon’s disease” – trying to run a business with long lines of communication in foreign countries, with difficult orebodies, and different laws.

Floated with fanfare in late 2006, Mundo started life with a high powered board of Australian directors and the aim of teaching South Americans how the boys from Kalgoorlie run goldmines. With Mundo shares suspended, and a Brazilian subsidiary filing for protection from creditors, it seems the score is South America 1, Kalgoorlie 0.

Murchison Metals is a third example of a company which bit off far more than it could chew, with management imagining that a small Australian explorer could develop a multi-billion dollar iron ore processing project.

It could not and did not, as was obvious to outside observers such as Dryblower even when Murchison was a $6 stock in early 2007, and more so now that it’s a 37c stock.

Manhattan Corporation has the luxury of being able to blame the Fukushima nuclear accident on its fall from $1.72 to 26c, but that is merely gilding over the fact that it is a company attempting to develop a uranium project in Australia where uranium remains the hardest of all minerals to mine.

There are other example of companies which have struggled to make headway during 2011, and the lesson for investors is that they would be unwise to believe that 2012 is going to be any easier as the world waits for Europe to slide into a deep recession, or unveil a believable rescue plan.

Evidence abounds that the next six-to-12 months is going to be a hard slog, with proposed capital raisings being shelved faster than at any time since the boom started back in 2003.

On the ASX today you can still find 29 proposed floats, most with mining as their business model, but with 22 of them postponed, or having withdrawn their prospectus completely as financial support melts and investment banks close their doors as the fingers of a European winter reach as far south as Australia.

This story first appeared in ILN's sister publication Miningnews.net.