Volatility means junior miners on TSX venture don't stay on top for long
Christine Dobby, National Post · Nov. 9, 2011 | Last Updated: Nov. 9, 2011 3:08 AM ET
The combined market capitalization of the TSX-V's top 100 junior mining companies ballooned to $20.6-billion in the 12 months ending June 30, a 62% increase from $12.7-billion one year earlier, according to a report from PricewaterhouseCoopers LLP.
Market capitalization is on the rise, the Junior Mine 2011 report suggests, with 36 companies in the top 100 having total outstanding shares worth more than $200-million this year, triple the 12 in that position in 2010.
But the report, released Tuesday, also cautions that volatility is the new normal and notes that since June, the total market cap for the top five junior miners listed on the TSX Venture Exchange has dropped 38%.
"Market volatility is not just a fleeting trend, it is the new business as usual for juniors and more intense than ever," says John Gravelle, Canadian mining leader for PwC.
"Stability is prevented by fluctuations in currency, the current pace and reliability of earnings growth, aggravated political environments and sovereign debt issues across the globe," he adds.
Copper Fox Metals Inc. (CUU/TSX-V), which topped the list this year, had a market cap of $790-million, while Advanced Explorations Inc., (AXI/TSX-V) which came in at 100, had a market cap of $81million. Positioning on the top 100 list is also volatile, with only 45 mining companies from 2010's list remaining on the list this year.
The report suggests that larger mining companies are outsourcing their exploration activity and investing more money in acquiring companies currently engaged in exploration, which could benefit junior miners.
Exploration companies accounted for 58 of the top 100 mining companies on the TSX-V and the mining sector in general makes up 57% of the exchange's market cap, the report says.
