AT least for the short term SAN has dodged this one . . .

Downturn financing

Peter Koven,

FP Magazine

May 01, 2009

Tim Winborne

...

Virtually no industry has been spared from the economic crisis, but it's hard to find anyone suffering worse than junior miners. Raising money has been nearly impossible for the speculative juniors ever since the credit squeeze hit, and stock-price collapses of 90% or more are the norm. For some juniors, the principal strategy is to simply not spend any money for the next six months.

Yet there are glimmers of hope. Investment bankers are stressing that junior miners willing to be a little creative can find ways to raise money. But they have to look at unusual methods - anything from export-credit-agency loans and mezzanine debt financing to off-take agreements and desperation mergers.

For junior miners that don't want to severely dilute their investors' stakes or give up project ownership, there is increasing interest in royalty or streaming deals with companies like Franco-Nevada Corp. and Silver Wheaton Corp. Under these arrangements, miners get an upfront payment from another company in exchange for giving up a percentage of future cash flows.

Unfortunately for cash-poor juniors, the royalty and streaming companies hold all the cards in a market like this. They're besieged by requests from desperate juniors and can ignore all but the best prospects. "This is when our business model works best," says Peter Barnes, Silver Wheaton's CEO.

Posted earlier by Scruf.

RUF (No relation to Scruf!)