JUNIOR MINING

Junior gold and silver miners outperforming explorers

It's a case of perhaps not so bad in a bad junior market. A slew of junior gold and silver producers, among others, have been trading sideways in recent months while explorers have continued to fall.

HALIFAX, NS - 

Whither they go, who knows.  But it seems someone hit the pause button on junior mining stocks - but not explorers - in recent months. Since April and May some of the better known names have been largely trading sideways. But meanwhile, broadly speaking, explorers have continued to fall, if at slower pace in the last month or so.

A quick round-up of the performance of some junior producers this year shows their quasi-stock-stasis since about April even as other juniors fell:: Fortuna Silver Mines (TSX, NYSE: FVI) peaked over C$7 per share in 2012. It followed the junior herd down thereafter, but since early April it has traded between C$3.50 and C$4.50. Capstone Mining (TSX: CS) was up near C$3.50 near the start of 2012, then slid, and since late April it has hovered either side of C$2.25. Great Panther Silver (TSX: GPR) was over C$2.50 in early 2012 and then it slid until late April/early May. Since it has more or less traded around C$1.80. Avion Gold (TSX: AVR) was over C$1.50 at the outset of 2012. Since mid April, though, it has been bouncing along the 50 cent mark. B2Gold (TSX: BTO) earlier this year was over C$4 per share. Then it sunk briefly below C$3 per share in April and, since, it has mostly traded between C$3 to C$3.50.

While surely these and other junior producers wish their shares would reverse trend and climb, there looks to be some solace for their shareholders and management in the relative performance to junior explorers as roughly measured by TSX Venture. The Venture board peaked in late February near 1,700 this year and since it has basically slid, even though through the same period the junior miners experienced some shareprice stability.

In April the TSX Venture was down around 1400. It hit an intermediate low near 1230 in May. Then it sunk to 1160 in June. Since it has squeaked sideways - about two months after a score of junior producers started doing just that. In July the TSX Venture has come near its June low in recent days, but not broken below.

That junior producers have fared better than explorers of late could suggest investors are listening to mining analysts and commentators - the former especially - who have suggested that the place to be in the junior market, if you want to be there, is in producers. Of course, beyond sharing in the broader pain on the markets, each of the junior miners above have particular reasons for their share performance. But the sideways performance of junior producers, as the broader junior market has fallen, is obvious and makes for compelling evidence investors are positioning themselves accordingly. Perhaps the biggest so-called upside in junior mining is not the prospect that majors come a-pickin', though this will, as always, continue to occur, but that intermediates and juniors consolidate. Takeovers and mergers will come at a premium to then prevailing shareprices.

Are mineral explorers to be condemned and dumped in favour junior producers then? Maybe that has been happening in recent months. Certainly as a whole junior explorers have dredged deeper. But committed bargain hunters will only see this as more reason to consider explorers as tasty prospects that could produce outsized paybacks. As was recently noted in these pages some with an appetite for risk are treasure hunting.