RE: READ THIS.... https://www.stockhouse.com/opinion/movers-and-shakers/nov/30/scary-numbers-point-to-shakeout-in-junior-sector
Of the 1,800 companies in the junior mining space, as many as 524 have less than $200,000 in working capital, says newsletter writer John Kaiser.
Resource sector officials are predicting a shakeout at the junior end of the market next year after viewing some eyebrow-raising statistics compiled by U.S. newsletter publisher John Kaiser.
The California-based Kaiser Bottom-Fishing Report publisher says that of the 1,800 junior mining resource companies he covers, as many as 524 have less than $200,000 in working capital.
These are companies that typically trade in Canada on the TSX and TSX Venture Exchange.
“I presented [these statistics] in Switzerland two weeks ago and scared the hell out of a lot of fund managers,” said Kaiser during an interview with Stockhouse.
Given that corporate expenses for legal fees and listing requirements can reach up to $100,000, industry officials say the implications for the sector are obvious.
“If these numbers are correct, they point to a serious rationalization in our business,” said David Moore, Chief Executive Officer of Serengeti Resources Inc. (TSX: V.SIR, Stock Forum), a Vancouver-based junior exploration firm.
“John would not be surprised to see a good number of them simply disappear in the coming while,’’ wrote Canaccord Wealth Management advisor David Pescod in his November 28, 2012, Stocktalk report.
Kaiser has expressed the view that up to 700 juniors probably have too much stock out already and will be forced to do rollbacks in the coming months.
This is because financing will be challenging and 218 companies on his list have no flagship exploration project on their books.
Meanwhile, as investors wait for economic conditions to improve, the junior explorers that survive are in for a tough time, industry officials say.
It likely means mergers and combinations will be a major theme for 2013.
“There has got to be all sorts of companies out there with a mismatch of projects, cash and people,’’ said Moore. “Some combination of two or three of those companies could add up to being greater than the sum of the various parts,’’ he said.
“It’s going to be a great time for companies with cash.”
Still, there continue to be companies that investors should be keeping an eye on, Kaiser said.
For example, based on the work that they are doing in Nevada, Kaiser likes Nevada Exploration Inc. (TSX: V.NGE, Stock Forum) and McEwen Mining Inc. (TSX: T.MUX, Stock Forum).
Kaiser is also telling investors to put Bitterroot Resources Ltd. (TSX: V.BTT, Stock Forum) on their watch list. The Vancouver-based junior is active in Michigan where Kaiser is watching exploration on nickel, copper and platinum group metal targets in the vicinity of the junior’s Michigan properties.
Trading at 12 cents on Friday, Bitterroot has a market cap of $13.7 million, based on 113.9 million shares outstanding. The 52-week range is 19 cents and 2.5 cents.
-----------------------------------
How much does EAS has for next year operations.....after paying all the dues and big shots....