<lack of access to the capital market and juniors (and many seniors)>
Capital starvation for juniors is not new news and has been well known for some time. It's a two edge sword, as I would also argue that inadequate investment on the development side, has already sealed the fate of future supply and points to bottlenecks (and perhaps sooner than most realize), even if demand remains poor. The last point is a big question mark, as war environments can be big resource users and can be the cause of supply disruptions. This historic resource deflation will also cause the many marginal producers to go out of business and shut down, something I believe will now accelerate. As markets reset to new conditions, this will set the stage for a low cost reserve search "panic" among the survivors or new startups.
That's why my general focus has been on juniors that offer one or more of these factors:
1. already have top quartile deposits, that don't necessarily require much more work: BGI, BAY, ELD, FGX, IMG, MFL, NSU.
2. have high impact projects that are being meanigfully carried and pursued by JV partners: YMC.u, MR, IP, NPG, PFN, IMR
3. have meaningful treasuries left over that allow them to carry on with high impact projects for at least a year or two without major dilution: FGX, IMR, SLR, GBG, SWG, TNX, MOY, CBD, IMG.
4. Capital starved firms that have tremendous leverage from high impact projects and that offer extraordinary value: GEO (merger?), NGT (JV?), TNK (or JV at Vicuna?, carried at Fungurume), MNP, KRT. Good private placement opportunities for larger investors. |
