Peru: junior miners are back | beyondbrics | FT.com

In Peru back in 2008, junior miners – those companies who rely largely on capital markets for finance – proved to be the canaries down their own mines who warned of the credit crunch.
Juniors had flooded into the market to join a frenzy of exploration, attracted by a heady mix of soaring commodity prices, cheap credit, China-like rates of economic growth and Alan Garcia’s pro-investment policies. But, true to hot money form, they had already begun a rapid exit by the time Lehman Brothers fell and the commodities boom ended.
Now juniors are coming back, in a more orderly fashion.
They have been attracted, in part, by Peru’s economic recovery: GDP growth has hit double figures in recent months, and is forecast to be as high as 8 per cent for 2010 as a whole.
Credit is also attainable once more. Gonzalo de Rosa, junior-mining analyst at Banco de Credito, told beyondbrics:

As the crisis passes, [juniors] have been more actively getting more credit facilities; they can do private placements. I don’t think that’s going to be an issue for them in the next few years.
As prices begin to present a positive trend they’re going to be gain more appreciation in the market.

Some juniors have a headstart now, with social and environmental impact assessments approved before the downturn. Yet the increase in junior investment is not as steep as it was two years ago.
Alonso Segura, chief economist at Banco de Credito, points out the juniors’ challenge:

One thing is betting on the sovereigns of an investment grade country which is a star performer in the region, a medium-sized economy, or buying bonds of a very well rated company – a very different issue is buying bonds of a junior company, which is basically going to a casino.

Casinos or not, junior miners are certainly back in vogue

Peru: junior miners are back | beyondbrics | FT.com

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