Extract from
The Australian
Turbulence fails to dampen party mood
paul garvey
February 09, 2013 12:00AM
Steve Parsons, managing director of Gryphon Minerals, is sure his company will secure the $200 million it needs to develop its multi-million-ounce Banfora gold project in Burkina Faso.
In a clever piece of marketing, Gryphon hosted a tour to the wineries of nearby Constantia the day before the conference began.
Among the invited parties were several potential financiers, each of whom had their professional jealousies stirred by the sight of their rivals. A number of the banks have since moved to assure Gryphon that they can deliver the funding on their own.
Parsons blamed the funding challenge facing the company for the big slide in Gryphon's shares over the past year.
"I've just spent time up in London, and there is money sloshing around. Funds do have money, but they're just really scared to invest," he said.
"There's always going to be an Africa risk or development risk or developing country risk, but financing risk was the big thing last year and that's going to be the big thing this year as well."
Those development projects carrying higher perceived risks, or involving large construction costs, would find it hard to get off the ground, he said.
"A good project will get fully funded, so we will get funded," Parsons said. "Projects that are a little bit difficult or higher capex will struggle."
One ramification of the tightness in funding is the prospect of consolidation. Companies may now be more willing to explore deals with well-funded peers.
Most juniors recognise the benefits that come from being a multiple mine business, as opposed to a single-mine venture, in terms of reducing a company's risk profile.
It would not be surprising to find a new wave of consolidation launched out of this year's Indaba as juniors join forces to make themselves more appealing to investors.
Whether they are at the big end or the small end of town, miners working in Africa face real challenges for the year ahead.
GRY Price at posting:
44.5¢ Sentiment: Hold Disclosure: Held
