Small miners set to dust off drill rigs in 2014 - Reuters survey
(Minews) - A large majority of the small Canadian-listed mining companies that help drive global mineral exploration expect to drill this year after a grim period of hibernation for many cash-strapped explorers, according to a Reuters survey.
The results of the survey of more than 60 mining executives are one of the first clear indications of a turning point in sentiment among so-called junior miners. Although money has begun to trickle back, the cost of drilling is down and the price of gold is up from last year's painful lows, hopes for the sector have been muted at best.
More than three quarters of the Toronto Stock Exchange and TSX Venture-listed miners and explorers that participated in the survey said they expected to have a drilling program at some point in the coming 12 months, while fewer than six in 10 said they had drilled in the previous 12 months.
"This is the best time to drill, the drilling contractors are very cheap," said George Topping, chief executive of Venture-listed explorer Wolfden Resources Corp .
Wolfden is one of the hundreds of small explorers that make Canada a center of global mining finance. With no revenues, these companies exist to drill, or typically hire specialized contractors to do the job in Canada and around the world.
Explorers drill columns of earth and rock, called drill cores, and the precise quantities of gold or other metals in those samples can make or break fortunes.
Over the past two years investors have shunned these speculative stocks, making it difficult for the explorers to sell the equity they need to operate. At the same time, major miners have been hit by a spike in costs and lower prices, and all but stopped looking for promising explorers to invest in.
Running low on cash, junior miners scaled back drilling programs, and many in the industry began to fear that hundreds of them could be delisted, choking off the industry's development pipeline.
Wolfden did drill last year, but CEO Topping, a veteran sell-side analyst who took over the company in December, said it will likely do more this year: "These days, if you've got a success it will get noticed," he said.
As the survey responses are from a relatively small group of companies, the results are not an exact representation of the industry. But they show statistically significant trends, and broadly reflect the views of publicly listed mining companies in Canada, most of which are small,