In addition to the financial disaster, Northland managed to drag 15 large institutional shareholders into this mess and they have research coverage from 16 different (very embarrassed) analysts.

Imagine what this is doing to the industry as a whole for small companies hoping to finance mine development or exploration. It has far reaching implications.

Simply take a look at Champion Iron Mines (TSX: T.CHM, Stock Forum; 50 cents). This week they released an attractive Pre-Feasibility study on their Canadian iron ore project. The problem is, capital costs are close to $1.5 billion. The market sold off on the news. Not because the economics were poor, but because they will likely have a terrible time trying to finance this.

This is a harsh reality facing many (if not most) smaller companies that have spent millions (and often years), reaching the point of Feasibility Study. Not only will your operating costs need to look very attractive, but your capital costs of construction will be the deal breaker.

Previously investors would take a “long term” approach to financing. That is not the case anymore and when it comes to mining in particular, bankers and large private investors are scrutinizing these deals like never before. If they don’t, they risk losing their job. And few are prepared to risk their career for a small cap or micro cap company. That is also why it is so hard to find proper coverage of small companies.

And it’s not just the obvious building, equipment, and labour costs of developing a mine. Companies are facing more hurdles with respect to the environmental and escalating costs of power, roads, water, etc. And because mining is often associated with less developed countries, government risk has increased along with labour disputes and disruptions.

When the smoke settles – it is a very different world we are living in since the financial crisis of 2008. And the impact this is having on the junior exploration game cannot be under-stated. No longer can a small company just walk into a brokerage office and plan to raise millions in high-risk capital.

Financings will be smaller, lower priced and require the added bonus of warrants (which fuels excess dilution and share price volatility).

And for those fortunate enough to have cash from two or three years ago, they better manage it well because now it is worth its weight in gold. It may allow the cash rich ones to pick and choose higher quality projects.

This is part of a recent newsletter on the other board and if even partially true it would make DP's recent money raising look even better!