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Post by Mags1959on Sep 28, 2010 9:11am

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Strong Focus On Mining Ventures from Today's Globe

Interesting read on the renewed financial support for mining ventures in today's Globe & Mail....

Gold communities buzzing as prices soar

Tuesday September 28, 2010 Globe & Mail

David Parkinson

A few months ago, Vancouvermining entrepreneurs Greg Thomas and Drew Brass were spending more timetwiddling their thumbs than touting their mining ventures. No one waslistening.

“In all the years I’ve been raising money forpublic companies, this was particularly a tough time,” said Mr. Thomas, whoheads up a couple of mining start-ups, TAC Gold Corp. and Regal Resources Inc.“In the summer, this was a ghost town… No one bothered going to the office. Itwas really quite something.”

But a few weeks ago, as the price of gold marched relentlessly to record heights,something changed. Suddenly, the popular gathering places along Burrard Street formovers and shakers in Vancouver’smining community became beehives of activity again.

“I had drinks with a friend last week and we noticed there were lots ofquote-unquote ‘rounder-looking’ guys [young aspiring promoters] there, and wesaw a bunch yesterday at the Cactus Club – I just knew they were junior goldcompanies sitting there, they just had that look about them,” said Mr. Brass,Mr. Thomas’s business partner in the ventures. “There are a lot of guysdowntown now trying to make something happen.”

And critically, said Mr. Thomas, “The brokers are taking meetings now.”

Phones Are Ringing

Financiers and entrepreneurs in this country’s mining-investment hot spots –Toronto and Vancouver – say their summer doldrums havegiven way to a renewed fundraising fervour. Phones have started ringing,restaurants have started filling and investors have started coming out of thewoodwork looking to do deals.

And, they say, most of the interest revolves around gold ventures. Therecord price levels for the metal – which reached a once unimaginable $1,300(U.S.) an ounce this past week – have focused eyes on opportunities to get inon the golden action, as investors salivate over bullion’s bullish outlookcombined with still-depressed valuations of gold stocks, particularly at thejunior end of the sector.

“The price of gold has affected us,” said veteran Toronto mining promoter Wayne Beach, who hasseen his business turn increasingly toward gold projects as investorfascination with the gold story rises. “Where it’s easier to raise money, youtend to be lured in that direction.”

Veterans of the mining-finance game say it’s early days, and nothing likethe party atmosphere in their community in boom times such as the mid-1990s.Still, they say, gold fever has brought a welcome return of investment cash toa business that lives and dies on its ability to raise capital.

“Investors are coming to us now,” said Scott Waldie, president and chiefexecutive officer of North Atlantic Resources Ltd., a junior gold explorationcompany headquartered on Toronto Street, a narrow two-block strip of officesand restaurants in Toronto’s financial district that is one of the world’sgreat hotbeds for mine financing.

“I know a small Canadian gold company who has been approached with a[$5-million] financing from people they’ve never heard of. … Some of the smartmoney is picking up juniors at bargain-basement prices, because they know thatthe future for gold and for commodities in general is very bright.”

Kinross' Red Back Acquisition

While mining insiders agree that the headline-attracting gold price hasplayed a big role in revitalizing investor interest, they point to Kinross GoldCorp.’s $7.1-billion (U.S.) takeover deal in August for Red Back Mining Inc. –a gold exploration company with only modest production out of a couple ofAfrican mines – as a key catalyst for the sudden buzz on the Street.

“All of a sudden, when Kinross made the play for them, it really made a lotof people stand up and look at the rest of the gold market,” Mr. Brass said.

And the junior gold firms have become a focus of attention, largely becausetheir stock valuations look extraordinarily cheap. Mining analyst DavidHaughton of BMO Nesbitt Burns noted in a recent report that price-to-earningsratios for “emerging producers” in BMO’s coverage universe are at about 12.4times, based on forecast 2011 earnings, compared with 25 times for intermediateproducers and 17.4 times for the sector’s biggest names.

“A lot of the juniors are significantly undervalued, given the assets thatthey have,” Mr. Waldie said.

Juniors In Focus

North Atlantic raised nearly $3-millionearlier this month – its biggest influx of cash since 2007 – through a privateplacement of shares and the sale of its stake in an African uranium explorer.But Mr. Waldie said it’s still a buyer’s market. Investors may be putting theirmoney back on the table, but they expect bargains.

“Cash was available; we needed cash to move things forward. [But] it’s stillrelatively expensive capital – we sold it still at a relatively low price,” hesaid. “We have a group of sophisticated investors who have said, ‘They needmoney … Let’s buy these assets now while they’re cheap.’”

That mixed reality is keeping an air of caution hanging over the otherwisebrightening mood in the bars and eateries along Toronto Street in the east and Burrard Street outwest.

“There’s no question, people are feeling more buoyant, but they aren’tsmug,” Mr. Beach said. “They’ve been beaten up so badly, they’re stillcautious.”

“It really is in the early stages,” said Mr. Thomas. “It’s not that sort of1996 mania. And thank goodness – because that’s a sign that you’re close to theend.”