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Those keeping an eye on the gold space as of late will no doubt have noticed the flurry of large financing agreements.
Gold has gained about 10 percent in the past month, buoyed up by events like the Swiss franc’s decoupling from the euro, and it appears that move is having a positive effect on gold miners as well.
Beyond that, it’s worth noting that the miners announcing financings trade on the Toronto Stock Exchange, and gold prices are even higher in Canadian dollars — the exchange rate puts the gold price at about C$1,600. Furthermore, the Canadian dollar dipped lower last Wednesday with the Bank of Canada’s cuts to short-term interest rates.
A number of news outlets have already complied lists of companies that have announced financings over roughly the past week. Companies that announced them between Tuesday and Wednesday alone include:
- Asanko Gold (TSX:AKG,NYSEMKT:AKG)
- Richmont Mines (TSX:RIC,NYSEMKT:RIC)
- Primero Mining (TSX:P,NYSE:PPP)
- Detour Gold (TSX:DGC)
- Osisko Gold Royalties (TSX:OR)
- Romarco Minerals (TSX:R)
Lydian International (TSX:LYD) and Yamana Gold (TSX:YRI,NYSE:AUY) also announced financings the previous week. Amounts raised ranged from C$17 million to several hundred million dollars, with Romarco securing the highest amount at about C$300 million. In total, roughly C$800 million was raised amongst the companies mentioned.
Certainly, mining companies have had difficulty raising funding this past year, so last week’s news was a breath of fresh air. However, some are more cautious about getting excited.
Jay Kellerman, managing partner at Stikeman Elliott, told the Financial Post that there’s no telling how long the positive sentiment on gold will last. He suggested that miners could be pushing through financing deals in case the positivity is short lived.
“We see it over and over again. These windows open so quickly and might be so short … Who would have imagined this [financing wave] a week ago?”
For his part, Mineweb‘s Kip Keen has said that funding definitely went to the “more conservative end of the junior sector.” While he sees the “partial thaw of investor interest in juniors mining equities” as good for the sector, and that thinks the amounts raised are significant, he believes that the industry still needs more dollars flowing to the drill bit.
In any case, it has been good to see some gold miners starting off the year by securing multi-million-dollar financings. Investors will certainly be hoping to see the gold price keep continue to rise and bring excitement to the sector.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Related reading:
Richmont, Asanko Kick Off the Year with $30- and $40-million Financings