A Shot in the Arm for the Mining Industry
One of the better barometers used to measure the well-being of an industry is the ease and relative abundance of money that can be raised in the marketplace. Money raised as equity, either through initial public offerings, secondary offerings or private placements, leads to increased spending and, presumably in the not-too-distant future, growth.
If recent figures gathered by Gamah International and compiled by the Toronto Stock Exchange are any indication, the Canadian mining industry is set for a strong comeback after several years of declining investment.
During the first half of 2003, mining and exploration companies listed on both the Toronto Stock Exchange and the TSX Venture Exchange completed 779 financings and raised a whopping US$1.5 billion. This compares with the US$1.1 billion raised in 2002 and the paltry sum of US$275 million in 2001; it represents a 43% increase from 2002 figures and a staggering 463% increase from 2001 figures.
Another interesting point is that the 779 financings completed during the period represented 86% of the world’s total mining equity financings for the period, clearly demonstrating that Canada is the centre when it comes to this re-emerging mining and exploration boom.
Looking at the two markets separately, the TSX had fewer financings with 79 but it managed to get the lion’s share of the dollar value at US$1.28 billion. The TSX Venture Exchange had the remaining 700 financings valued at US$270 million. Interestingly, there was a broad distribution in the dollar value raised per financing. In Toronto there were 27 equity issues completed valued at Cdn$1 million each, 13 completed for values of Cdn$2-20 million each, eight between Cdn$20-100 million and three valued at more than Cdn$100 million. In Vancouver there was a similar pattern with more financings completed at the lower end of the scale, but the dollar value per equity issue was much smaller, ranging from less than Cdn$250,000 to $20 million.
This wide-ranging distribution suggests that all companies, from the junior explorers to the senior miners, are participating in the cash grab in a manner that was inconceivable just a few short years ago.
This is all very positive but what will it mean? Again, according to Gamah International figures and the TSX’s compilation, nothing but good news.
There are more than 1,100 companies listed on the Canadian exchanges, equating to more than 50% of the publicly-traded mining companies in the world and representing the largest peer group of mining companies. Companies on the TSX alone number about 200 and control over 2,400 exploration and mining properties and more than 300 mines and mills around the world. Around 40% of these assets are situated outside North America.
Most of the US$1.5 billion raised will likely be spent on exploration, either advancing current properties or developing as-yet-unknown projects. There will be successes, and ultimately new mines will be developed and put into production–a circumstance that will benefit individuals, governments and industry both at home and abroad.
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