Here's an article with a quote from Mr Sage at the bottom if anyone is interested. Probably in the wrong thread but so many threads floating round, I just shoved it in the last one.
Mine minnows in deep water
JUNIOR players in the resources sector are fighting to make a splash, with the fairytale success stories now few and far between.
And it is set to worsen, with the ongoing global credit crunch allowing the major players to prey on those struggling to stay afloat.
PricewaterhouseCoopers global mining leader Tim Goldsmith said the credit crunch was already affecting the mining industry and the results would be felt for at least the next year.
"The cashed-up miners are well-positioned, but those that don't have cash will be in trouble," he said.
"The big miners generally have operating mines with low operating costs, and are in a position to generate lots of cash.
"But the small to mid-tier companies often have no operating assets and need funds to help them get to operational status. Since the credit crunch it has obviously been hard to raise debt and equity with no income."
Mr Goldsmith said the mining majors were well-placed to benefit from the failing junior sector, with projects being delayed or suspended, reducing supply in the market and affecting the price in their favour.
Several miners have gone under in the past year, including Monarch Gold and View Resources, and Perilya recently cut its workforce and scaled back operations at Broken Hill to stay afloat.
Mr Goldsmith said the mid-tier sector was already feeling the effects of the credit crunch and he predicted it would get worse for some.
"We have already seen it through the share price, where the mid-tier section has been damaged," he said.
"The real challenge is going to be, as the cash supply dwindles to zero, how these companies obtain further funds to keep going.
"I think we will see this play out in the next 12 months."
Junior gold player Dioro Exploration recently received a $14million line of credit from BNP Paribas, to help it develop its Frog's Leg and South Kalgoorlie projects. Dioro managing director Rhod Grivas said the credit crisis had made it difficult to obtain any form of finance to develop projects.
"We were able to raise debt funds on the basis that the bank could see a return on its money with the extra levels of due diligence," he said.
Mr Grivas said mining had been an optimistic industry, although raising funds for exploration had never been easy.
But he said that if the volatility continued, it would become extremely difficult for companies to raise funds, except through debt.
"The bigger companies will weather the storm better and will look for growth opportunities through this period," he said.
Fat Prophets analyst Gavin Wendt said the fundamentals of the resources sector were still strong, but agreed it would be hard to raise development funds through the equity markets.
"A lot of projects need to get developed to meet the increasing demand from China, but as credit markets continue to contract it will continue to hurt supply and exacerbate the problems in the market," he said.
"The smaller companies exposed to one commodity are those that are really struggling and the majors are looking around."
Cape Lambert Iron Ore chairman Tony Sage was more optimistic in his outlook.
He said there were funds available for the right project and management team.
He had just completed a small raising in London for a Brazilian gold project, netting pound stg. 1.8million ($3.9 million) in about 20 minutes.
"There is plenty of money out there," Mr Sage said.
If you have the right project and right management it is easy to tap into the funds.
"There is a credit crisis but the issue is with credit -- there is still the financial ability for fund managers to invest.
"Once the bottom is hit, there is only one way to go.
"I think it will go up quickly and quality projects will benefit."
CFE Price at posting:
23.3¢ Sentiment: Buy Disclosure: Held
(20min delay)