All that glitters has been golden for Vancouver’s junior mining sector this year.
According to a PwC report released Thursday, market capitalization for the top 100 junior mining companies listed on the TSX Venture Exchange reached $12.7 billion for the 12 months ending June 30.
That’s a 49% increase from the $8.6 billion total for the same period last year, though still well below the $18.1 billion the top 100 hit prior to the recession.
PwC said the strength of one commodity, gold, has outshone most others in the junior mining sector. According to the report, 55% of junior mining companies on the TSX-V are focused on gold.
That is up from 50% last year and 42% in 2008 as gold prices continue trading at historic highs above $1,300 an ounce.
“The dominance of gold is not surprising given the steady increase in gold price over the past five years,” said John Gravelle, PwC’s national mining leader. “Gold companies will likely continue to dominate the top 100 for the foreseeable future provided that gold prices remain buoyant.”
The rise in market capitalization has special meaning for Vancouver’s junior mining sector, which was slammed when the recession hit and capital all but dried up.
Seven of the 10 top 100 junior mining companies are based in Vancouver, PwC said, maintaining B.C.'s reputation as a launching point for international mining activity.
Mike Cinnamond, leader of PwC’s B.C. mining practice, said, “The mining industry is a truly global industry, everyone is operating all over the world and Canadians are not afraid to go look for stuff in jurisdictions where traditionally there hasn’t been as much activity historically."
Yet in light of the good news, the report also pointed out a 31% drop in exploration spending to $64 million while cash used for acquisitions soared 349% to $270 million.
Cinnamond told Business in Vancouver the trend is somewhat concerning because investment in exploration is key to the future health of the mining industry. A lack of it could point toward a future supply gap, he said.