Skilled Migrant Professionals December 2015 | Page 28

Finance

Raising

Capital

For Resource

Projects

An in-depth look into the
current environment

M

any resource-rich countries, including Australia, have noted
the rhetoric about the end of the resource boom. Just like
the top and bottom of the market, however, it’s never as
good or as bad as it seems. Most people walking through West Perth
these days will attest to the fact that raising capital for mining projects is
very hard, and without that capital, those employed by the industry look
on with concern. Given that for every direct job in the mining industry,
another four are created elsewhere in the economy, we should all be
keeping an eye on the changes in financing mining projects.
It’s often said that we’ve reached the top of a market when taxi drivers start sharing stock advice. It is possible then, that the bottom of a
market could be linked to the number of companies backing in to small
cap mining shells as a way to become publically listed? At the end of

28

www.smpmagazine.com.au | December 2015

By Carmie
Olowoyo,
Director at
Empire Equity

2014, at least 10 such backdoor listings
on the Australian Stock Exchange involved
minerals companies acquiring technology companies, with a further six similar transactions pending. Roughly a dozen
Canadian junior miners have also taken this route, shifting not only into
technology but also into true frontier sectors such as medical marijuana.
This trend is illustrative of the mounting struggles mining companies are
facing to raise capital.
With global mining stocks down 37 per cent since 2010, equity investors remain leery of the sector. As world-leading equities are reaching new heights in early 2015, it’s unlikely that we will see the same
for the bulk of the mining equities in the coming year while near-term
commodity fundamentals remain weak. Sentiment toward the resources