The TSX Venture Exchange (TSXV) has had a challenging summer with low trading volumes and low price growth of mining exploration companies. The TSXV, which lists many junior mining companies, has been struggling to attract investors’ interest and capital amid the competition from other sectors and platforms, the lack of liquidity and financing, and the regulatory burden. However, this fall, we’ll see if investors will be piling back into the markets as the macroeconomic trends are favourable to the mining sector.
The demand for metals is expected to increase due to the green energy transition, the infrastructure spending, and the economic recovery. The supply of metals is also likely to face constraints due to the pandemic-related disruptions, the environmental and social challenges, and the underinvestment in exploration and development. These factors could create a favourable environment for mining exploration companies to generate value and returns for their shareholders.
On July 20, 2023, Emergent Metals Ltd. announced that it had completed a lease option to purchase the Silver Dollar property in British Columbia, Canada, which hosts several high-grade gold and silver occurrences.
This could be good news for investors who are interested in Emergent Metals Ltd. because:
The lease option gives the company the right to acquire 100% interest in the property over a period of four years by making cash payments and issuing shares to the vendor. This reduces the upfront cost and risk for the company and allows it to focus on exploration and development.
The property is located in a favourable mining jurisdiction with good infrastructure and access. It is also adjacent to the historical Bralorne-Pioneer gold mining camp, which produced over 4 million ounces of gold from 1897 to 1971. This suggests that the property has a high potential for hosting similar gold deposits.
The property has been underexplored and has shown encouraging results from previous exploration programs. Some of the highlights include rock samples grading up to 51.6 grams per tonne (g/t) gold and 377 g/t silver, and drill intercepts of up to 5.13 g/t gold over 12.8 meters. The company intends to follow up on these results and conduct additional exploration work such as geophysical surveys, soil sampling, trenching, and drilling.
Other important terms to this news was:
The lease option is subject to a 2% net smelter return royalty (NSR) payable to the vendor, which can be reduced to 1% by paying $1 million. This means that the company will have to share some of its future revenues with the vendor if it decides to develop and produce from the property.
On July 27, 2023, the company announced a non-brokered private placement of up to 10 million units at a price of $0.10 per unit, for gross proceeds of up to $1 million. Each unit consists of one common share and one warrant, which entitles the holder to purchase one additional share at a price of $0.15 for a period of two years. The company intends to use the net proceeds for general working capital and exploration expenses on its properties.
Is there a Light at the End of the Tunnel for Exploration Miners?
The gold price, which is one of the main drivers of the profitability and attractiveness of gold exploration companies. The gold price is influenced by supply and demand, inflation, interest rates, geopolitics, and investor sentiment. The gold price as of August 18, 2023 was $1,889.53 per ounce, which is slightly higher than the current level of around $1,800 per ounce. However, the gold price is subject to volatility and uncertainty due to various factors such as the pandemic, the economic recovery, the monetary policy, and the geopolitical tensions.
The financing environment, which is crucial for gold exploration companies to raise capital and fund their exploration and development activities. The financing environment depends on the availability and cost of capital, the risk appetite of investors, and the regulatory framework. According to GoldMining Inc, a gold exploration company listed on the TSXV, it has recently completed a non-brokered private placement of up to 10 million units at a price of $0.10 per unit, for gross proceeds of up to $1 million. This indicates that there is some demand and interest for gold exploration companies in the market, but also that valuations are still depressed in the market.
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