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Debt financing for junior miners is still available, said speakers at a Mines and Money conference.

This is despite statistics presented by Vaughan Wickins, executive, mining and metals at Standard Bank, which showed that debt finance has fallen to its lowest level in three years.

Total mine finance has declined to around US$50bn in 2013 from US$80bn in 2010 and US$100bn in 2011 and the majority of this decline has come from shrinking debt finance. The decline has slowed somewhat this year, with loans only declining by 6% year-on-year during 2013, Wickins added.

However, insisted Rick Rule chairman, Sprott US Holdings, for some financiers the debt finance business is growing. He added that his own debt business has grown in the past year and there is more funding available to a company that meets financiers expectations.

“There is a lot of money available,” said Rule, “but the issuers have expectations of capital that were formed in times when conditions were optimal.”

One speaker added that there was a lot more debt coming out of US markets than in previous years, and Ani Markova, vice-president and portfolio manager of AGF Investments, believes that debt is going to continue to be the major provider of mine finance – equity markets this year continued at a fraction of their 2009 levels.

“I don’t believe the equity markets will be there for juniors over the next few years, the funding is not going to come from the equity side but from the debt side,” she said.

The equity markets have been lean for senior miners too, speakers said, as was evidenced by Barrick Gold’s US$3bn equity offering earlier this year where it struggled to sell all of the 163.5 million common shares on offer. It was reported in the press at the time that about a quarter of the shares in the issue was not taken up during the offer.

But the overall message was that the financing picture is not what it was in 2008, financiers on both the equity and the debt side are requiring more information from miners.

Speakers equated the importance of management teams to the importance of an asset: “It is imperative that there is a good management team, there are good assets out there which are being run by bad management teams [that you shouldn’t invest in],” said Edward Sugar, principal with EAS Advisors.

Capital discipline is also a factor which will help financiers decide whether to invest in a mine. “Investors feel that miners are not exercising enough capital discipline,” said Jason Burkitt, UK mining leader with PwC.

One delegate explained to GTR, that many miners are not presenting the right information around costs, and avoiding all mention of project risk. However, he added: “Risk is not necessarily a bad thing, some investors are looking for a certain risk.”