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« How Big Miners Are Reliving the Late 90’s Bust: Steve Todoruk | Main | Japanese-French consortium sees Turkish nuclear reactor ready by 2023 »

Was Rick Rule Wrong to Call a Rout in Resource Juniors?

Jeff Desjardins is the founder of When Rick Rule said he expected lots of companies to ‘give up’ or ‘de-list’ before this bear market was over – Jeff took note. But where are the reports of companies leaving the resource sector? In this piece, Jeff takes a deeper dive…

By Jeff Desjardins,

Many commentators had predicted that mediocre junior exploration companies would de-list or die off this summer.

The reasoning was that lots of companies were running low on cash, and poor-performing companies would have a tough time getting people to give them more money. Sooner or later, it seemed like the lights would have to go off for these companies. The arguments made sense, but how did it turn out? In my opinion, the trend is still in motion but it is taking longer than expected to see these companies go away.

Lots of companies are still running out of cash. Some are receiving financing and some are stuck with very low cash balances and no likely way out.

In at least a couple of jurisdictions that we’ve studied, a ‘capitulation’ among many of the poorest junior miners appears to be getting closer. Average cash balances on the balance sheets of junior miners are declining, and there are stark differences in cash balances between companies that are able to raise capital and those that cannot.

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