Justyna Cetnar removes dead leaves from cannabis plants in an grow operation by licensed marijuana producer Green Relief in Flamborough, Ont. The cannabis industry has vacuumed up a big chunk of the speculative capital last year that has typically found its way into the coffers of Canada’s junior mining firms.
Mining IPOs, by contrast, took in $51.6-million, down sharply from about $830-million the previous year, although the number of issues climbed to 25 from 20 in 2017 thanks to a late surge in small equity financings by junior players. Investors in existing mining equities have also succumbed to reefer madness. But the shift of capital is not necessarily negative for established mining companies or their financing prospects.“The hot money is going to go to the sector that’s yielded the most immediate returns. So the very marginal juniors are going to be outcompeted by cannabis,” says Rick Rule, chief executive of Sprott U.S. Holdings Inc. in Carlsbad, Calif.
Indeed, “the bedrock of investment” by market participants focused on mining’s improving fundamentals remains unchanged, says Phil Hopwood, head of Deloitte’s global mining and metals group in Toronto. “You put that all together and you have a multifaceted strategy in terms of raising investment,” Mr. Hopwood says.
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