I hate to be the harbinger of bad news, but I have noticed a couple financings that have gone down the tubes recently. Is this the beginning of the end of easy money for mine developments? Will the ready supply of investment cash dry up in the near future?
On Dec. 5, YUKON ZINC of Vancouver announced that it was withdrawing its prospectus offering of securities due to “current unfavourable equity market conditions.” The company was hoping to raise $130 million that would go toward the development of its Wolverine property in the Yukon.
Now, it seems, the company has been forced to scale back its plans. Yukon Zinc announced an $8-million financing of units and flow-through shares on Dec. 7. Eight million dollars is a lot less than $130 million, and not nearly enough to get the mine in production during 2009.
Word of another cancelled financing has come from Vancouver-based FAR WEST MINING. Again, the company cited “current unfavourable equity capital market conditions.” The company had wanted to raise a relatively modest $10 million for work on its copper-gold projects in Latin America and its lead-zinc prospect in Australia.
What’s “unfavourable” about today’s equity markets? Five years of rising commodity prices have made it seem as if any mining or exploration company could raise unlimited amounts of money. It is odd that investment would dry up while the underlying metal prices are strong. Certainly, I would expect Yukon Zinc and Far West to try again when markets are more “favourable.”
I hope these two experiences do not mark the start of a trend toward tighter capital markets. There are so very many interesting projects that deserve development around the world. Let’s keep the mining money coming for them.