Canadian companies are in the wonderful position of being able to raise hundreds of millions of dollars for exploration and development. Not so the Australians. Reports from Down Under bemoan the fact that investors are staying away from the industry in droves.
Bruce Kay, former executive of Normandy and Newmont Mining, told a meeting last month in Australia just how bad things are. He said the 55 resource companies that made offerings raised an average of A$4.2 million on each one.
Maybe A$4.2 million would cover a bit of drilling and "corporate expenses", but it won’t go far toward developing a new property. Compare A$4.2 million to the Cdn$1.2 billion raised last month alone by Barrick Gold and Placer Dome.
The result of not being able to raise sufficient money in Australia is that there have been only three major discoveries there in the past 10 years, according to an article in the Melbourne "Herald Sun." The paper points out that the fabulous Olympic Dam discovery was made in 1975.
Dave Comba of the Prospectors & Developers Association of Canada, told CMJ that there is no Australian equivalent to Canada’s flow-through share plan. The figures he gets from his Gamah International subscription totalled $285.4 million of flow-through financing announced by Canadian companies in the first nine months of this year.
"We’re confident that since the enhanced flow-through scheme came into effect in October 2000, that over $1 billion has been raised that way from then to the end of September," he added.
Steve Kee of the Toronto Stock Exchange reported a whopping $3.6 billion raised by mining companies through the TSE and TSX in the first nine months of this year.
My guess is that public offerings, flow-through shares and private placements will undoubtedly top Cdn$5 billion this year.
Obviously, Canadians are doing something right. The tax advantages of flow-through shares continue to attract investors. Our exploration industry must be looking in the right places at home and abroad. Company executives are having success in European as well as Canadian markets. Add to that this country’s technical know-how and reputation as a reliable producer, and you have investments that will underpin the next generation of producers.