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Junior Mining Companies in Today's Market, Part 1: The Role of Junior Mining in Today's Market and Challenges Ahead a Survey of Recent Legal Issues and Challenges Faced by Junior Mining Companies

Stuart Breen, Andrew Robertson, 2015 International Mining and Oil & Gas Law, Development, and Investment

The recent volatility in commodity prices has led to write-downs, financial losses, and a commensurate drop in the market capitalization of many junior mining companies. In response to the instability, many investors and fund managers have eschewed the mining equity markets which serve as the traditional source of financing for junior mining companies. Major and some mid-tier miners have been able to survive the difficult economic climate by selling off non-core assets, cutting costs, mothballing certain projects, and walking away from joint ventures. Junior miners have responded to the tough economic conditions by finding creative solutions, be it a shift from raising equity to allowing investments directly in assets, or transacting with private equity funds entering the mining space. The latter phenomenon has also paralleled a shift in the former, as private equity funds are using a diverse range of methods by which to invest in mining companies.

An increased focus on compensation costs may also help ease expenses for certain companies, as well as guard against shareholder unease (or, in some cases, revolt). In the face of diminished earnings, many companies have been pressed by shareholders to renew an emphasis on tying executive compensation to company performance. Companies that have not concentrated on aligning compensation to performance, or have ignored certain