Mining finance dries up

FINANCING for Australia-listed mining players fell 68% in the recent quarter, with research group IntierraRMG expecting cash-starved juniors to collapse by year-end if the “capital drought” continues.
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Blair Price

In what was another gloomy instalment of its mining and finance market report series, IntierraRMG cited a combination of falling metals prices, nervous bankers and risk-averse investors as reasons for a startling plunge in the finance raised by listed mining companies around the world.

Its data revealed a total of $US2.28 billion ($A2.54 billion) was raised in the June quarter – a 56% fall from the previous quarter and a 63% decline year-on-year.

The Australia-listed segment of this appeared worse with $0.45 billion raised in the June quarter. This was a 68% fall from the previous quarter total of $1.41 billion.

The Toronto-listed brigade fared better with an 11% quarter-on-quarter fall to $1.09 billion for the June quarter while the London-listed crew surprisingly raised $0.5 billion, a 150% increase from what was a historically low $0.2 billion it raised in the March quarter.

The bigger mining companies around the world have particularly faced a rough time. The IntierraLive mining database revealed that $1.43 billion was raised in the June quarter by the 555 companies it tracks with a market cap exceeding $100 million.

This was a 65% fall from the $4.08 billion they raised in the March quarter. By the same comparison, minerals explorers were found to have raised 28% less to $1.04 billion in the June quarter.

Yet IntierraRMG editorial director Dr Chris Hinde chimed in with a grim prediction for the junior explorer sector.

“Cash holdings for the junior companies are now at critical levels (with overall cash balances of under $10 billion for explorers),” he said in a statement.

“Many of the smaller companies will be unlikely to survive until the end of this year unless there is a dramatic reversal of fortune.”

Overall, IntierraRMG said the global mining industry faced a severe capital drought and concerning levels of debt.

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