Ego, national economy win, to restrain compression seen

In a mining market, which is roasted for discoveries with cash awash and, there are rock celebrations of reasons, why the junior profit sector should combine, but Ego and national economy in the way of so received could treated. Still playing of the years skimpy of the expenditure for research, when Rohstoffpreise were low, older itself get caught above and intermediary row of mountain men have under increasing pressure to replace their reserves.

The question many of the 15,000 analysts and executives are asking at this year's Prospectors & Developers Association of Canada conference in Toronto is where those resources will come from. The logical answer appears to be the junior sector.
"We believe the consolidation among the small-cap, or junior companies, is absolutely inevitable," said National Bank Financial managing director Gordon Bogden. "But that's always easy to say and very, very hard to do."

The timing is right because commodity prices are at 25-year highs and expected to stay buoyant for the next few years. Add to that the huge appetite among senior miners, which have bulked up through acquisitions, to replace reserves.

"The need is really accelerating at the same time as the opportunity has dwindled," said CIBC World Markets analyst Barry Cooper. "I point to the lack of discoveries in the last five years as one of the biggest disappointments in the current bull market."

There is also an increasing gap between the senior and mid-tier producers and juniors, with a high number of junior miners holding just one asset.
There are more than 35 Canadian-listed gold companies with a market capitalization between C$3 million and C$1 billion and more then 50 such base metal companies that are "within the snack bracket of any of the mid-cap companies looking for acquisitions," Bogden said.

But there are barriers in the way of such deals.

"Why hasn't this happened? The biggest reason in my mind is often ego gets in the way -- who's going to run it," he told Reuters on the sidelines of the conference. "M&A comes down to people."

Money is another hurdle. Buyers need to unearth the junior jewels, where they can earn attractive margins from project development. But those are hard to come by, Bogden said.
There is also the matter of owners who don't want to sell -- like Mindoro Resources Ltd. (MIO.V: Quote, Profile, Research) Chief Executive Tony Climie.

His company is exploring in the Philippines, where he hopes to get a nickel laterite deposit into production in 2008 and then focus on exploring gold-copper properties. He's not looking for buyers.

"It's just not on our radar screen right now. I think the right time is when you're struggling, when you can't raise capital. The only time we would have considered it in our 10 year history is four or five years ago," he said from the conference trade show floor.

Climie said he has no worries that his company will miss out on the current commodity boom cycle.

source:www.reutres.com