The junior mining sector has seen record capital inflows in capital, but one mining executive warns of the risk of intense, sudden interest in the space.
“The amount of money being raised and the consistent pattern of upsize in capital raises due to over commitment or the size of the deal having so much interest that people are fighting to get placed, that is pushing a wealth of risk capital back into the market that we haven’t seen since 1996-1997, 2007-2007, 2010-2011, and now this is the fourth one,” said Cal Everett, CEO of Liberty Gold.
Everett’s concern is how this inflow of capital will impact the public markets.
“The concern I have is not who gets the capital, but how is this going to affect the public markets when so many financings go free-trading with warrants,” Everett said.
While the pace of financings could be sustainable, Everett, noted that not all the capital is flowing into the highest quality projects.
“Because there’s so few quality projects available in the world, we’re seeing the assumption of risk capital going into areas where there is open geopolitical risk. And every bull market’s the same that I’ve gone through, people just throw the risk interpretation of wherever their capital is going to be spent, they throw it away, and they just take it on as being nothing. At the end of the day, when everything good has to come to an end at times, you’ll actually see positions where share prices do collapse,” he said.