The surging price of gold is breathing life into the S&P/TSX
Venture Composite Index (INDEXTSI:JX), and with over 50 percent mining companies
among all issuers on the exchange, its no wonder. Exceptional gold development
plays who are either already in production, likely to either put mines
into production, or sell them to a larger producer, include Gold
Standard Ventures Corp (CVE:GSV)(NYSEMKT:GSV), Integra Gold Corp (CVE:ICG)(OTCMKTS:ICGQF), Barkerville Gold Mines Ltd
(CVE:BGM)(OTCMKTS:BGMZF), and First Mining Finance Corp
(CVE:FF).
Listen to Gold Standard Ventures Corp CEO Jonathan
Awde discuss Goldcorp’s investment: http://www.midasletter.com/wp-content/uploads/2016/02/Jonathan-Awde-Gold-Standard-Ventures-160201-podcast.mp3
The possibility that the return of the gold bull market could actually
resuscitate the TSX Venture and put it back into a bull mode is the feint
hope that Howe and Bay street mining promoters have been longing for. With
global markets on the brink of collapse, such hope is now firmly in the realm
of likelihood.
Of the TSX Venture’s 1,070 companies listed in the mining sector, 100
percent of them are categorized as involved with gold and/or silver as part
of their portfolio projects. That means of the TSX Venture’s total of 1,818
issuers, 60 percent have exposure to the price of gold.
In the carnage of the past 5 years, however, many of those companies have
been rendered borderline unviable, because they have had to issue hundreds of
millions of shares at pennies just to keep the lights on.
The TSX Venture Exchange lost85 percent of value since its May 2007 high
of 3372,, and its fortunes are very visibly tied to gold, as the five year
chart below clearly demonstrates.
The plight of both the gold price and the S&P/TSX Venture Composite
index are intimately intertwined, as this chart clearly shows.
By this chart, the imminent lift in the TSX Venture index is very clearly
implied.
So the massive die-off in TSX Venture companies never really materialized,
as the innovative and adaptable entrepreneurial class at the helm of such
companies create novel ways to merge, take over, divest assets, and generate
investment. Thus, the next phase of any nascent gold bull market will see a
large number of share consolidations take place as these corporate structures
are repurposed and polished up to attract fresh investment.
Some companies like First Mining Finance Corp. have taken advantage of the
crippled companies around them to acquire a large portfolio of some of the
most interesting properties in various stages of advancement.
First Mining
Finance positions itself as a ‘mineral bank’ whereby it acquires minerals
assets trading at bargain valuations with the intention to hold them until
the market supports higher valuations. Its a model that many mining
entrepreneurs attempted – most of them in the form of ‘funds’ – but very few
succeeded, usually because of an absence of capital. The brainchild of
company founder and Chairman Keith Neumeyer, former president of First
Quantum Minerals Limited (TSE:FM)(LON:FQM).
Now as long as the gold price does not become subject to a concentrated
attack by futures market traders that has for the last five years been the
absolute given every time gold breaches about the US$1,280 mark, we might
actually find ourselves with a viable venture exchange again.
