VANCOUVER, Oct. 17, 2013 /CNW/ - The B.C. Securities Commission is
releasing a report today entitled B.C. Junior Mining at a Crossroads: Executive Management's Perspective at its annual industry conference, Capital Ideas. The report was
prepared by KPMG on behalf of the BCSC.
The BCSC commissioned the report to get a better understanding of why
there is such a significant downturn in B.C.'s junior mining sector,
and to help inform a discussion with industry about what can be done to
support its recovery over the coming years.
Fifteen senior executives were interviewed on a confidential basis to
get their thoughts on the current state of financing in the industry.
Overall, participants confirmed that the majority of root causes and
issues were due to the cyclical nature of the mining industry, and
current economic and market conditions.
Significant contributing factors identified include metals prices; slow
economic growth; global financial issues; the need for senior mining
companies to rid themselves of "toxic assets" and problematic projects;
and resistance to higher risk investments from both institutional and
retail investors. Of lesser importance, but identified by those
interviewed, were regulatory costs and policy barriers.
Participants generally agreed that while these regulatory and government
policies should be addressed, this would not solve the current
fundamental problem of raising capital.
Looking ahead, the interviewees believe that there need to be fewer
junior mining firms in order for the sector as a whole to recover.
Also, senior mining companies must clean up their balance sheets so
that investors can gain confidence in the mining sector again, after
which a recovery of junior mining companies will follow.
Several interviewees also noted that it is possible that Vancouver will
lose some of its infrastructure (geologists, lawyers, independent
brokers, accountants) that has traditionally served this sector and
made it a mining centre of excellence.
The interviewees agreed that there were opportunities for securities
regulators to improve and streamline their oversight going forward: to
make sure that there is consistent review and compliance for all
companies; and, to look for flexibility to reflect the disparity in the
size and nature of companies in the mining sector.
The BCSC is the independent provincial government agency responsible for
regulating trading in securities within the province.
SOURCE: British Columbia Securities Commission
For further information:
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