For all the concerns expressed recently that there isn’t enough cash being injected into junior mining stocks, when it comes to the really interesting ones it can be hard to persuade them to take your money.
This position was laid bare by Auryn Resources executive chairman Ivan Bebek, in an interview in which he discussed the company’s recent fundraising. Auryn (TSX:AUG) first said it was going to raise $3.5m, but eventually ended up with $5.25m.
Bebek said: “We were offered a lot more, but we were reluctant to take dilution at this stage.”
Even the money that was raised came from existing investors, who reached into their own pockets to the tune of up to $1m each rather than let anyone else get a piece of what they evidently feel could be one of the best mining stocks around.
Auryn’s appeal is based on the Sombrero project in Peru, which is often compared to the legendary Las Bambas and is currently the subject of interest from a number of mining majors - under confidentiality agreements.
Bebek also said that he saw further support from the gold price this year and would consider selling some of the company’s other assets in order to maximise the return for existing shareholders on Sombrero.
In other junior gold stock investment news, Pure Gold Mining (TSXV: PGM) announced it was seeking a higher profile for its Madsen gold project in northwestern Ontario by taking a listing on the main market of the London Stock Exchange.
Pure Gold chief Darin Labrenz said the dual listing would boost the company's international profile and "facilitate improved access to UK and international gold-focused institutional investors." However, the company says it is not currently intending to raise capital in conjunction with the listing - so that’s another desirable junior mining stock that isn’t looking for your money - yet.
The gold price itself turned sharply this week, touching a ten-week low at one point in what was interpreted by some as a bearish trend.
“Such a drop will of course inflict further damage on precious metals stocks. How much damage it is not so easy to say looking at the 8-month chart for GDX [gold mining stocks], but it seems likely that it will crash the nearby support level shown [...], and it is unclear at this stage if this support will hold or whether it will breach it and drop further towards the lowest support shown on this chart,” Clive Maund wrote on Goldseek.
The World Gold Council, on the other hand, has made it clear that it thinks the dovish turn of the US Federal Reserve this year will support gold prices.
“Our historical analysis shows that when the Fed has shifted from a tightening to a neutral stance, gold prices have increased, even if this effect has not always been immediate,” the council’s investment update stated. “In our view, the combination of rangebound US interest rates, a slowdown in the appreciation of the US dollar and continued market risks will continue to make gold attractive to investors.”
Of course, not all of the best mining stocks are dedicated to the pursuit of gold. Junior miner American Lithium (TSXV: LI; US-OTC: LIACF) confirmed lithium mineralization at its TLC claystone project in Nevada this week, saying that three recently drilled holes extend mineralization on the project to over 1 km in strike length and confirm the company's previously reported discovery hole. The company intends to continue stepping out with further drill holes and has staked additional claims, expanding the project to the north, south and west.