Direct investment in the TSX listed shares of junior gold companies this year is the highest it’s been in the last 10 years, CIBC World Markets says in a report.
The bank’s research analysts calculate that about $290 million has been invested directly in juniors so far in 2017 – “the highest recorded in the past decade and double the value of 2015 and 2016 combined.”
“Nearly one-half of the equity raised by junior gold stocks (under $1 billion in market capitalization) on the TSX in 2017 has been in the form of direct investment by a larger gold stock,” CIBC states. “No previous year has exceeded 20%.”
In addition, “the weight of money flow currently observed into passive investment funds (such as quant and ETFs) suggests that junior gold stocks may need to rely more on direct investments from larger companies in the future [rather] than the traditional equity issues to fundamentally driven institutional investors.”
The institutional equity research team anticipates that there will be more direct investments to come and that juniors with projects in the Yukon, Quebec, Ontario and Nevada are the most sought-after.
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