Resource World Magazine

A U G U S T / S E P T E M B E R 2 0 1 8 www.resourceworld.com 27 markets away from investment in junior explorers. This segment is dependent on a pool of high risk capital which is finite. The craze over cannabis and cryptocur- rency has depleted the amount of capital available for exploration." "Now that legal recreational cannabis is here, as the distribution models and regu- latory regime become clear, we should see things stabilize somewhat as more realistic valuations are applied to the sector," Davis said. "Hopefully, that coupled with the improvement in underlying fundamentals will improve the appetite for investment in junior explorers." "I agree with you with regards to banks avoiding junior miners," said Davis. "Even though the larger bank-owned dealers seem to pay lip service to their interest in supporting junior companies, I don't really see it translating into things happening." "Certainly commodity prices are going in the right direction but the recovery is definitely uneven," said Davis. Referring to a recent PDAC report entitled State of Mineral Finance 2018; Gaining Momentum, she notes that the report stated that global exploration expenditures from 2012-2017 followed exploration financing trends, declining over 65% from a peak of US $20.5 billion in 2012 to US $6.9 billion in 2016. The trend reversed in 2017 as expenditures increased approximately 15% compared to 2016 to US $7.9 billion. Canada and Australia continued to lead global activ- ity in 2017, accounting for 13.8% and 13.6% of expenditures. (For more details, go to http://resourceworld.com/index.php/ pdac-sees-growing-momentum-in-mineral- exploration-space/ to read Resource World's interview with PDAC President Glenn Mullan's comments on the report) "I think that the junior mining sector of non-revenue producing companies that have nowhere else to go but the equity mar- kets are still really struggling," said Davis. Commenting on Resource World bring- ing up the point that the junior exploration sector is the cornerstone of the Canadian mining industry that eventually generates untold wealth around the world, mak- ing the junior resource sector extremely important, Davis said, "I think that's abso- lutely true. I think that a lot of people are beginning to recognize the problem. One of the trends here that we've seen over the past few years has been the more senior companies focused on cost cutting – even though they have to find a way to increase their resources as their mines are depleted to keep things going. At least one analyst remarked that there is now a trend for the majors to make investments in junior explo- ration companies to redress this deficiency." "Finally, one of the reasons we're not seeing a great deal of activity in the junior space is that there hasn't been an exciting discovery for such a long time," said Davis. "The only way that's going to happen is if we fund junior companies who are the true prospectors and explorationists and are good at making discoveries." n INVESTMENT

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