Why the stars are aligning for junior resource companies - Agentis Capital's Michael Gray

Описание: A lack of liquidity is the main problem facing the junior resource sector, said Michael Gray, partner, Agentis Capital.

In mid-January Gray spoke to Kitco Mining at the Vancouver Resource Investment Conference 2024.

“The institutions are not coming down into the explorers and developers,” he said. “Part of it is that they're seeing redemptions, they have concentrated portfolios. Ten or 15 years ago they had 80 positions, now they’ve got 35, for some of the main resource funds in Canada and the U.S., so that's part of it. They're seeking to manage liquidity, and the juniors just don't have liquidity.”

Gray added, “We're seeing a focus on some exceptional stories and some of the returns that keeps the institutions very interested, but I think the liquidity is a real issue for the sector right now.”

He expects there will be more joint ventures in this market, and despite the risk-off environment, said “I think the stars are really aligning for 2024. There's a lot of healthy balance sheets amongst the mid-tier gold producers and copper-gold producers, and I think they’ve had time to now look at what's on the menu and make some decisions, and that's what the junior market really needs, is some of these developers to be bought for decent premiums, make some money, recycle some funds into the sector.”

Gray thinks there will be more strategic investments made by senior and mid-tier producers in 2024, such as the recent CAD$23.3 million Barrick Gold (TSX:ABX) invested in Hercules Silver (TSXV:BIG). “They need the juniors. They need these greenfield discoveries. They need the drilling to be high-risk, and them to be exposed to it somehow.”

Coverage of the Vancouver Resource Investment Conference 2024 was sponsored by Snowline Gold.

0:00 Junior sector woes
2:50 Should juniors build mines?
5:11 Calibre Mining-Marathon Gold deal
6:20 Lack of competitive tension
8:02 Capital discipline
11:03 Strategic investments for majors
13:26 Copper
15:11 What to look for in 2024
16:18 Healthy investment strategy
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