PRIVATE capital investors are increasingly stepping in to fund mining ventures as traditional sources dry up for the junior end, forcing explorers to find new ways to secure financing.
Preliminary analysis by Ernst and Young has suggested that private capital investors accounted for 21 per cent of mining deal activity globally in the nine months to September 30 this year, versus just 12 per cent for the same period last year.
In addition, the data also shows that capital raisings in the mining and metals sector globally could be the lowest since 2009, with a sizeable proportion of this year's raisings from record corporate bonds issues from larger companies.
Paul Murphy, Ernst and Young's Australia and Asia-Pacific mining and metals transaction leader, said Australia's sector would reflect the global figures.
He said at the junior end of the local market 12 months to two years ago, Australian explorers could still get away a $5 million to $10m capital raising, which was basically drilling money.
"There was money available out there. But what we have found in the last nine to 12 months, even the ones who could have gotten (a raising) away last year, they have dropped right off."
He said companies were having to rethink their financing strategy from just tapping the market, adding that there was always tension at the pre-production stage.
"There is increasing interest in mining and metals from private equity funds, other specialist funds and sovereign wealth funds and we see this trend continuing into 2013," he said.
"Private capital is increasingly looking to take advantage of low-equity valuations to take PRIVATE capital investors are increasingly stepping in to fund mining ventures as traditional sources dry up for the junior end, forcing explorers to find new ways to secure financing.
Preliminary analysis by Ernst and Young has suggested that private capital investors accounted for 21 per cent of mining deal activity globally in the nine months to September 30 this year, versus just 12 per cent for the same period last year.
