When will junior mining turn around?

Today a friend asked if junior mining was dead. I told him what Rick Rule told me, which was: “No, if large mining companies are not exploring, which they’re not, nor acquiring, they are six or seven years from extinction.” It’s the juniors who provide new projects for the majors to deplete. The sector can only stay down for so long, and will come back within a few years, as it always has in the past.

“But when specifically?” he asked, and truth be told I don’t know the answer. But I got a queu from Facebook today that gave me a hint:

pollard

“Huge night at the casino…only one way to celebrate..PARTY sub! !!”

An old friend shared the above photo this morning celebrating a successful night at the local casino. He had apparently won several thousand dollars playing blackjack, and spent some of his winnings at a Subway Restaurant later last night…

Not only was his Facebook photo hilarious, it also caused his audience to forget the fact that blackjack is not always a winning game. A photo like that innocently stirs up the greed in the best of us, and has the potential to drive even those who have been previously burned by the game back to the tables.

I learned later today that several acquaintances had followed my friend to the casino upon seeing his success via the social network, to mixed results. But that was enough to remind me that junior mining isn’t dead, we just need to see some winners, and then get jealous of their success, before the whole cycle starts over again.

There will be majors buying projects from juniors, soon enough, and the market will have its day in the sun, before long. Things can and will change in a heartbeat.

About Tommy Humphreys

Tommy Humphreys is a writer, consultant, investor and speaker focused on early stage mining, oil and gas, and technology companies. He founded the Pacific Website Co. in 2006 and CEO.CA in 2012.

  • SGrey

    Biggest danger is that junior mining comes back, but doesn’t bother to include public markets. Private equity effectively shut off early stage oil & gas investment in the United States more than a decade ago (which is why there were no retail dollars in the early days of the Bakken). This is good for the industry as it concentrates focus on quality projects over quality promotions…but not so great for Howe Street. PE financing in the mining space is already smashing records from even 5 years ago.

    • jcobre

      interesting point, but one big difference, oil has quick revenue that PE can lever into more developments once it starts. jr mineral exploration will always be a punter’s game, and needs public market liquidity for illiquid (and normally irrational) “investments”.

  • brad

    “The Geological Survey of Canada released a report in June 2011 on the geothermal resource potential in Canada and found that the in-place potential for geothermal power could exceed one million times Canada’s current electricity consumption.” Total Electricity Generation in Canada (2011) 592.32 Twh x 1,000,000 is more then earth consumes ? Send U.S. green base load energy supply