Facts ‘N’ Figures: ’06 proves good year to be a junior

A new report from consulting firm PricewaterhouseCoopers (PwC) says junior mining companies listed on the TSX Venture Exchange had a tremendous 2006. That’s not news, but the numbers certainly are astounding.

PwC’s first-ever report on Canada’s junior mining sector says the total market capitalization of junior miners rose to $27.6 billion — a whopping 86% increase from $14.8 billion in 2005.

PwC says the increase was mostly owing to strong metal prices and investor confidence.

The PwC survey examined the financial position of the top 100 of the 967 junior mining companies on the Venture board, based on market capitalization as of Sept. 30, 2006.

“Gold was a key reason for the growth on the TSX-V in 2006. Four of the five largest mining companies on the exchange list gold as their commodity of focus,” says Paul Murphy, PwC partner and head of the firm’s Canadian mining practice.

The survey found that one of the most impressive numbers of 2006 was the $1.2 billion that exploration companies were able to raise through issuing shares, a 206% increase over 2005.

Murphy adds: “The TSX-V is a good home for Canada’s junior mining companies who can then graduate to the larger TSX when they become bigger-scale producers.”

The single greatest investment by Venture board mining companies in 2006 was the $409.4 million they put towards mineral properties and exploration. This was 79% more than in 2005. More was also spent on property, plant and equipment in 2006 for a total of $103.9 million, more than double that from the year before.

“These are the kind of investments that are expected of junior mining companies and could pay high returns to shareholders if new properties are both discovered and developed to their potential,” Murphy says.

In 2006, all junior mining companies had $4 billion in total assets, $2.6 billion more than in 2005. PwC’s report looked at how continually strengthening commodity prices have placed the sector in a prolonged boom period.

The junior mining survey showed that the combined market capitalization of the top five companies on the TSX-V more than doubled in 2006 to $3.7 billion from $1.7 billion in 2005. The top five’s share of the Venture Exchange’s total value rose slightly to 13.4% from 11.4%. This shows the overall growth of the TSX-V during 2006, as companies of all sizes saw value appreciation for their shareholders.

The top five companies in 2006 by market value (exploration/production) were:

* Urasia Energy, $1.23 billion (production);

* Aurelian Resources, $826.6 million (exploration);

* Northern Dynasty Minerals, $657.4 million (exploration);

* ECU Silver Mining, $569.2 million (production); and

* Seabridge Gold, $474.9 million (exploration).