Mining juniors jumping
For the first time in years, Howe Street's firms are blooming and promoters are dispensing tips to an appreciative public

John Greenwood
Financial Post

Nevertheless, since the start of the year, the price of copper has risen 40% and is now sitting at over US$1 per pound, close to a six-year high.

And gold is above US$400 an ounce, higher than it has been in more than seven years.

The major beneficiaries so far have been the big mining firms. But as the boom continues capital is starting to trickle down the food chain to the junior miners.

"That's a good thing because they're the ones the industry relies on to come up with the new discoveries," says Robert Bishop, publisher of Gold Mining Stock Report, a popular investment newsletter.

In the first nine months of 2003, Toronto Stock Exchange and TSX Venture Exchange exploration and mining companies raised $2.6-billion, nearly 20% more than in the whole of 2002.

In the first 11 months of the year the Venture exchange has listed 24 new mining companies, up from 19 the previous year.

While Toronto is a world capital in terms of major mining players, Vancouver is headquarters to the junior mining sector, the exploration companies.

"We have one of the most robust junior mining sectors in the world," says Dorothy Atkinson, a Vancouver-based analyst at Boulder Investment Partners Ltd.

Prospectors and miners started coming here more than a century ago -- in fact, they helped open up the province.

Howe Street burbled with truth and rumour as legendary mining promoters, such as the late Murray Pezim, chatted up the junior companies that were combing B.C. for the next big discovery. Some even struck it rich -- as was the case with Mr. Pezim's Eskay Creek gold mine.

In more recent years, the city's junior miners played a key role in finding mines in other countries as well.

But the last decade has been a difficult one. Despite huge discoveries like the Ekati diamond mine in the Northwest Territories and Voisey's Bay in Labrador, the period was also witness to the notorious Bre-X fraud and the softening of metal prices.

And then in the late 1990s came the tech bubble, which sucked much of the remaining capital out of the mining industry.

Many of the geologists and financiers who are the backbone of the sector quietly went off in search of new opportunities.

"We lost a lot of capable, technical people that couldn't hang on," Ms. Atkinson says. "One of the issues Vancouver is going to be facing over the next 10 years is the greying of the sector."

Mining shares are rising again but many of the players have a lot of lost ground to make up.

Mr. McInnes, for instance, was forced to finance his companies out of his own pocket at the bottom of the market.

"I covered the taxes, the property payments. That's a pretty expensive proposition," he says.

In today's buoyant market, industry executives like Mr. McInnes finally have the opportunity to recoup their losses and start laying the groundwork for new discoveries.

© National Post 2003