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While relatively high gold prices favor the producers, weak financing conditions are going to be a drag on companies not yet producing, noted Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae and Meridian Mining Executive Chairman Gilbert Clark.
Meridian Mine (TSX:MNO) is focused on advancing its Cabaçal gold-copper deposit in Brazil. Earlier this week the company released a positive preliminary economic assessment for the project showing an after-tax net present value of $573 million and a 58.4% internal rate of return using $1,650 oz gold and $3.59 lb copper. Clark said the project's strong economics is something not seen by the markets for many, many years.
Looking at the broader market, Harris said there are two factors that are holding back gold juniors.
"I think the outlook for the gold juniors, developers and the explorers is not quite so rosy," said Harris. "A lot of people think...it is going to be a tough year to raise equity."
Harris added that critical metal companies like copper and lithium have "taken off like a rocket" limiting the amount of funds available for precious metal companies.
"[With] a limited pool of capital available, that naturally means there's perhaps going to be less available for the gold juniors."
The gold index or GDX is down nearly 10% year-to-date and 30% for the year.
