Why junior miners are headed in the 'right direction'
With a global pandemic and crashing stock markets, its no surprise financings have dropped off a cliff.
On Thursday Kitco caught up with Kai Hoffmann, CEO of Oreninc. Hoffmann's firm tracks financings in the mining and exploration space.
Hoffmann said financing activity has been dismal with COVID-19 roiling the markets. He said there have only been a handful of financings over $10 million. Illustrative of the bad month is Silvercrest, which raised $75 million in mid-March in a bought-deal financing. The markets then went south and the banks used a "disaster out" clause to try to pull out of the deal. Hoffmann noted that the issue is now before the courts.
Still Hoffmann believes that fundmetals are still good in the junior and mining space. World financial markets are just in turmoil.
"I think we have close to 145 mines shut down worldwide, but we're going in the right direction. At one point we'll see even a supply crunch and that's going to have a massive effect on the gold price," said Hoffmann.