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NEWGENGOLD REVIEW

New gen funding

by Mark Andrews

he interface of trust between the junior mining sector and “I think it is a real problem that is getting worse,” Hronsky said.
Tsophisticated holders of risk capital has collapsed and now “In 2000, they were raising $4-5 million and 20 years later they
innovative solutions to repair the damage must be delivered. are still raising $4-5 million; that isn’t enough.”
Dr Jon Hronsky from Western Mining Services Pty Ltd, believes Majors such as Rio Tinto Ltd and BHP Ltd have started beefing
there is an ever-increasing pool of sophisticated risk capital up their exploration expenditure in the greenfields space across
available in the world, but a major reluctance for it to be spent various commodities, however, gold majors have focused on
on junior company investments. M&A to increase their scale.
“In a world where interest rates are so low that the capital pool is Hrosnky said the pipeline of quality gold projects available was
increasingly looking for valid, high-risk, high return investments starting to thin out and companies were now realising the value of
– it should be a match made in heaven,” Hronsky said. greenfields exploration.
“The challenge for us in industry – and there are some ideas of But, has that realisation arrived too late?
how we do attract that capital – is to build that interface to tap
“Robert Friedland made a comment a few years ago saying if you
into that risk capital which is really sitting there quite lazy and
are living in the present, you are 3-5 years behind other people. I
looking for opportunities to get a decent return on investment.”
think that is the story with greenfields. I think the smart money is
Juniors trying to attract funding is difficult at any point of the in the companies who have realised that you have to move into
commodities cycle and it is perhaps the failed trends of the past greenfields,” Hronsky said.
that continue to hamper the sector now, according to Hronsky.
However, the greenfields environment can be unforgiving,
He said that 20 years ago, juniors didn’t raise enough money to particularly for adventurous junior companies.
sustain proper exploration programmes and the situation hasn’t
Breaker Resources NL found this out the hard way. Despite
changed.

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