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Permanent brain drain and other perils of the junior downturn

A dearth of junior financing has painful implications for the most important junior asset: brains.

Author: Kip Keen
Posted: Tuesday , 18 Jun 2013 


It was fitting I caught John Kaiser a few hours before he was on his way to attend a meeting in Vancouver about the dire state of the junior market. I had called Kaiser, the California-based owner of Kaiser Research, to get the latest on junior finances. He gave me that. It's not good.

751 out of 1,789 companies on the TSX Venture that Kaiser compiles data on (near all) have less than C$200,000 in the bank. This group has swelled by about 50 percent since about the same time a year ago. Many of these companies have marketcaps around C$1 million.

See also: Cashless juniors! Off with their heads!

All this is a real problem for juniors because, as Kaiser and others have pointed out, it costs about C$200,000 a year for juniors companies just to exist: e.g., to pay listing fees, accountants and Vancouver and Toronto rent. Not only that, but if your marketcap is $1 million or so, you can't really raise money to fund much if any exploration, Kaiser noted. Companies are only allowed to issue 25 percent of their share count a year in financings, without shareholder consent, making it difficult for these million dollar juniors to raise cash to be spent beyond the bare necessities, like salaries.

To read this article in full please click here.

If this is correct then it certainly doesnt bode well for the junior mining companies.

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