Money may be flowing back into the mining sector but junior companies are having a tougher time raising funds in recent weeks, thanks to a renewed caution on the markets.
While the overall mining industry raised more equity in Canada than any other industry last year after suffering the most in the market meltdown of 2008, junior miners are still falling behind bigger players when it comes to finding cash.
"The speculative interest has fallen off a bit," said Wendell Zerb, senior analyst at Canaccord Adams.
"I think a lot of it comes into the volatility we see in the general markets over the last several months."
Average daily volumes on the TSX Venture Exchange, of which about 50 per cent is mining stocks, fell to 200 million in recent weeks, compared with 300 million earlier this year, which Mr. Zerb said is one indicator of less speculative capital coming into the juniors.
And while Canadian miners raised $22-billion of equity in 2009 - a 168-per-cent increase over 2008 - the number of junior deals lagged, according to a recent PricewaterhouseCoopers study.
It said the average size of financings on the TSX rose to $49-million, a 100-per-cent increase from 2008. However, deals on the TSX Venture Exchange fell 19 per cent.
A strong appetite for junior mining companies has yet to return, said Paul Murphy, leader of a the mining group at PricewaterhouseCoopers. "People lost a lot of money during the difficult times and lessons have been learned."
Juniors will likely see more money if and when markets become more settled. That could also translate into a re-emergence of initial public offerings, he said.
Getting financing has been the "single greatest challenge" said chief executive officer Michael Judson of Blue Note Mining Inc., which was forced to shutter its zinc mining operations near Bathurst, N.B., at the height of the financial crisis.
"You have to work harder and spend more time pursuing specialized funds, while in a normal market you'd have a broader base of investment options," said Mr. Judson, whose company is working on reopening a mine in Quebec, subject to financing.
Finding money also depends on the junior's story, the strength of management and the sector in which it operates.
"For the right project ... the market is good. Otherwise, it's time-consuming and slow," said CEO Peter Secker of Canada Lithium , which is developing Canada's first lithium mine.