Junior exploration programs will be 'pruned to the bone,' Macquarie says

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2013-04-16

In a new report on junior precious metal explorers that looks at which companies will have the cash to survive the current market and the decline in the gold price, analysts at Macquarie Equities Research predict that exploration programs will be “pruned to the bone with only a few exceptions;” very few equity financings will be completed during the remainder of 2013; and that the market will be pricing in US$1200 per oz. gold.

“The days of large exploration budgets are essentially over,” Michael Gray, Pierre Vaillancourt, Shawn Campbell and Darren Wiebe conclude in an Apr. 15 research note to clients. “It is particularly difficult for juniors with compelling early discoveries that need significant follow-up drilling (like Gold Standard Ventures (GSV-V)) unless a strategic investor comes to the rescue [like Agnico-Eagle Mines’ (AEM-T, AEM-N) recent investment in ATAC Resources (ATC-V)].”

“Other juniors that are trying to advance resources and de-risk projects will have a tough time resonating with the market (Eastmain Resources (ER-V)) unless there are potentially game-changing drill results (Probe Mines (PRB-V)),” they note.