Juniors with cash to spare should consider acquisitions
By Julia Johnson
Junior mining companies with deep pockets may have expansion opportunity in acquiring or merging with some of their peers that are cash-strapped and in dire need of project funding.
Cannacord Genuity analysts scoped out which juniors have money to burn and which are tight for cash in their May 8 Junior Mining Weekly report. The analysts looked at those with a market cap of between $20-million and $1-billion and ranked them by their working capital (minus long-term debt) market value.
Kobex Minerals Inc. and PNG Gold Corp., both of whom had values over 100%, topped the list of cash-rich juniors.
The analysts suggest those with money to burn should look towards other juniors that are having trouble sourcing requisite capital for exploration projects in the current market.
Liberty Mines Inc. and Rusaro Mining Co. rounded out the bottom of the list, with values of -316% and -230%, respectively.
The report cautioned investors to be wary of those with weak balance sheets that may be over-extending exploration and development efforts.
Overall the firm believes juniors offer fundamental value due to high commodity prices, but said all must be disciplined in managing cash.