From today's Globe:
Howe St. enjoys mining boom
Big appetite for exploration funds
By PETER KENNEDY
00:00 EDT Thursday, October 02, 2003
VANCOUVER -- After some sluggish years, the Vancouver brokerage industry is enjoying a renaissance as some of Howe Street's best-known players cash in on an exploration boom fuelled by rising gold and nickel prices.
Having helped to raise $1.3-billion for mining projects in the past six months, Canaccord Capital Corp. chairman Peter Brown has boasted that his firm is involved in a new mine deal almost every day.
"Markets go in cycles and this is a mining cycle," said Mr. Brown, who at age 61, is one of Canada's most experienced resource financiers.
Indeed, after a six-year drought that many analysts attribute to the investment chill brought on by the Bre-X Minerals Ltd. scandal, brokers are being run off their feet as they attempt to feed the renewed appetite for mine financings.
While Canaccord leads the pack, other veteran Howe Streetbrokerages Haywood Securities Inc., Endeavour Financial Corp. and Boulder Investment Partners Ltd., are also positioning themselves to take a significant share in the buoyant market for mine financings.
"Officials in corporate finance departments are being run off their feet," said John McCoach, vice-president at the TSX Venture Exchange in Vancouver.
In an interview, Haywood Securities president John Tognetti said he has no doubt that in the next six months his firm will easily exceed the $500-million it helped to raised for mining projects since the end of the first quarter. "We have been asleep for the past six years and there are some huge projects out there that will need financing."
After returning to his mining roots following a spell in the film industry, Frank Giustra's company, Endeavour, is setting up a $10-million flow-through fund to finance junior mining exploration.
Sources say Mr. Giustra, the former chairman of Yorkton Securities Inc., recently bought units in IMA Exploration Ltd. that were offered in a $4.5-million bought deal financing that is earmarked for exploration in Argentina.
"The amount of money that is in the system right now is quite staggering," said Sean Hurd, a spokesman for Vancouver-base IMA.
He said that a year ago, money was being invested in the mid-tier gold companies, but now it is trickling down in to the junior exploration sector.
"People have seen tremendous gains and are looking around for other things to invest in," said Dorothy Atkinson, a mining analyst with Boulder Investment in Vancouver. Headed by Chan Buckland, Boulder is setting up a $10-million fund to finance junior exploration.
"You couldn't have done that a year ago, but you can do it now." Ms. Atkinson said.
Sources say brokers are benefiting from their willingness in recent years to finance mining projects when the sector was being shunned by the large bank-owned firms.
In an interview yesterday, Mr. Brown insisted that times have changed since the Bre-X scandal brought an end to the last mining exploration boom in March, 1997.
"The difference between this and the old days is that the companies that are raising the money are all run by real professionals," he said.
Still, in light of the lack of major new mining discoveries in Canada, analysts such as Ms. Atkinson, say they are shocked at how much some companies have raised.
NovaGold Resources, a company that two years ago was trading at about 50 cents, yesterday raised $35-million in a bought deal financing that was priced at $5 a unit.
Doug Leishman, a mining analyst with Endeavour, said the lack of exploration spending in recent years has left the industry without enough mining projects to absorb the amount of money that appears to be available.
"Hopefully that will change in the next year or so," he said.
© The Globe and Mail |
