A nice summary of why we are here.
Dear member,
The TSX Venture is in a transition phase. It will likely never be the same as it was in the first decade of this century. Many of us witnessed the madness of investors throwing money at companies with a nice land package, a pending LOI or a few good drill holes. Now, reality has set in; nobody cares about long-shots and grass roots plays with minimal cash in their treasury. That is the answer desperate, under-qualified and unproven CEOs have been given by institutions and investors as their treasuries diminish and their respective companies fade away. It is a harsh reality, but it is a great thing for investors because the flip side to the evaporation of equity on the TSX Venture are the remaining warriors who are trading at historically low levels.
A company is not considered a warrior just because it still trades. It is considered a warrior because of its ability to remain strong despite the tough market environment of 2012. Companies in a favorable position today, perhaps not in share price, but in cash on hand and advancing assets, in this market, have proven they are fighters, extremely savvy and have an asset which still generates significant capital interest. These companies have strong connections due to significant past successes and know how to protect and grow their company in the harshest of economic environments.
The bottom line is that this prolonged multi-year slump in the juniors, although tough on many portfolios, has forcibly thinned the herd. It has done investors of today a favor by eliminating the weak companies and dramatically reducing the value of even the best positioned companies. To be clear, eliminated does not necessarily mean bankrupt or gone. A company with less than $250,000 in the treasury, no asset or a weak under-explored or under-developed asset, accompanied by obviously weak management, might as well not exist. There are hundreds of companies that are simply not a viable investment - not even from a speculation or a gambling perspective. They're just dead in the water.
Kaiser Research Online reported on December 2, 2012 that there were 632 mining focused companies on the TSX or TSX Venture with less than $200,000 working capital. Accounting and exchange fees, never mind office rent, can run more than $100,000 annually. Even without paying salaries, one can see how 500 companies could be extinct in short-order. So make sure the companies you are conducting due-diligence on have, at the very least, plenty of cash in their treasuries.
Golden Opportunities
When gold begins to break out, as all charts and fundamental facts suggest it will, investment sentiment toward gold juniors, mid majors and producers will turn positive (in fact, it is already happening behind closed doors). Global investors will once again be searching for exposure to politically safe gold mining investments and this time (unlike 2009-2011), there will be far fewer companies to choose from.
Canadian and Australian gold companies will top the list for gold hungry investors from around the world. These two countries are both backed by commodity based currencies and have relatively low debt in comparison to the major western nations. Canada and Australia have also been exceptionally stable from a political standpoint and that encourages massive investment from abroad. .......... cont'd below ...........
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