View from the West (September 02, 1991)

Last month’s “View from the West” column (T.N.M., July 29/91) briefly illustrated the deplorable state of venture capital financings by comparing Vancouver Stock Exchange financings for the first six months of 1990 ($213 million) and 1991 ($169.1 million). Fortunately, July, 1991, financings were slightly ahead of those in 1990.

The success of August, a major financing month last year, will, however, determine the level of fall exploration for many junior companies. At the current level of financings, the forecast for 1991 is about $295 million, down significantly from the $456 million financed in 1990. Mining companies in 1990 accounted for $282 million or 62% of total VSE financings. The reasons for the decline are many and varied. The recession and the resulting reduction in risk capital is self-evident. However, all sources of risk capital have not reached the same level.

For instance during the first six months in 1991, Western investors supplied $48.1 million in private placements through the VSE as opposed to $51.5 million in 1990. Eastern investors have supplied $17.1 million in private placements, down significantly from the $63.6 million supplied in 1990. Similarly, VSE figures show that European investors who supplied $26.6 million in 1991 as compared with $53.1 in 1990 and U.S. investors who supplied $10.3 million in 1991 compared with $34 million in 1990 are investing less.

The reluctance of international investors appears to be principally due to current uncertainties of future British Columbia politics, reservations regarding the Vancouver Stock Exchange and to concerns respecting potential environmental “ecoterrorist” problems. The first will be resolved one way or the other with a fall election, the results of which may affect the resolution of the others.

Despite the decline in venture capital, a new venture undertaken by the British Columbia & Yukon Chamber of Mines with the help of the British Columbia Ministry of Energy, Mines and Petroleum Resources and Crown Publications has been an unqualified success.

In January, 1991, a mineral exploration data centre was established on the third floor of the chamber building. This is a profit-making enterprise, and it did turn a small profit during the first six months of operation. The centre sells hard copies and microfiche of British Columbia assessment reports as well as British Columbia geological publications. Currently the chamber is taking inventory of and pricing a number of out-of-print British Columbia and Geological Survey of Canada publications for sale to chamber members.

Two local geological consultants, Ken Hicks and John Harrop, provide the expertise needed to ensure the smooth running of this operation. Expansion plans include marketing data from the Yukon, Mexico and Washington state as well as other states and U.S. federal agencies.

Like last month’s “View from the West” column, this one also delivers both bad and good news. The bad news is that Frank Merryth, a longtime prospector and investor died at the age of 83.

Over the last 10 years, Frank met me at 7:30 most mornings in front of the chamber, came in with me, read the paper and usually before we opened at 8:30, left for Tiny’s and had breakfast with friends. He came back later in the day and spent hours going through the old files looking for prospects or data that would assist him and his partner, Dave Javorsky, in their prospecting ventures.

Friends say you could buy Frank’s entire wardrobe, including his shoes, for less than $200. Merryth left his entire estate of $100,000 to the chamber.