Part of the Chairman’s Letter to Shareholders fr

In spite of a record breaking year for Wall Street, the mining sector remains mired in what many say are the worst markets in their memory. While the price of gold has suffered a decline of just over 35% from its highs of 2011, most of the junior mining sector has experienced declines in share value in the 60-80% range, with declines exceeding 90% not being uncommon. In addition to the obvious destruction of wealth, the severe liquidity crisis has been both the cause and the continuing effect of this implosion of the markets. In short, an inordinately high percentage of capital has left the sector and is unlikely to return in the near term. It may very well take a decade or more to see capital influxes return to previous levels. Meanwhile, many companies are left barely hanging on or devastated, to the point where many now trade at market values well below the value of their liquid assets.

What has changed is the survival prospect for the business model that has been used to this point by the junior mining industry, wherein companies raise capital to finance their exploration through repeated issuances of new stock in the public markets. With stock prices now battered to abysmally low levels, this modus operandi is even less feasible in today’s market.