TORONTO (miningweekly.com) – The junior mining sector still faces immense difficulties and high levels of attrition, but there is light at the end of the tunnel for those with experienced management teams and promising projects or operations, Quintana Resources Capital president Lawrence Roulston told an audience at the Prospectors & Developers Association of Canada 2015 conference on Sunday.

“Some rays of sunlight are showing through the dark cloud that hung over the industry for the past few years,” he said, noting that some companies were getting funded and that there had also been some notable takeovers.

The general free-fall on the TSX-V had also been arrested. And while the performance remained muted, it belied the successes a number of juniors had achieved in advancing their projects and positions.

“It doesn’t matter that there are a lot of companies in the industry still doing badly in terms of share price. What we need are a few good companies that we can focus on and invest in,” he noted.

Indeed, investors had started returning with consensus that the market bottom had been reached. This was particularly the case for contrarians who sought to buy during the trough and before the cycle turned upwards.

In monetary terms, around $4-billion of new money had flowed into the treasuries of those junior miners holding attractive projects with robust business plans, Roulston pointed out. “Roughly half the money has been in equity, the other half in the form of debt.”

Long term, juniors had an embedded advantage of metal demand growing on increased global population – one that was more urbanised and industrialised, particularly in Asia. And while gross-domestic-product growth in China was currently at 7%, down from previous years, the figure still represented a vast amount of additional metal required.

There was also the need among seniors and midtiers to replace expended mines and to maintain, at the very least, their supply equilibrium. “And remember too that it’s getting harder and harder to find and develop new metal deposits,” Roulston noted.

This meant many deposits in junior hands, while not highly valued today, were likely to garner interest in the years ahead.

Meanwhile, the strength in the US dollar was assisting in two important areas. Firstly, American investors now had a 20% discount on Canadian juniors based on the exchange difference, helping to make them more attractive. Secondly, a strong US dollar discounted many of the local costs for juniors using the greenback, helping to ease tight margins.

Mergers and acquisitions activity continued, with several companies proving attractive to buy over the past few months, with Roulston noting at least 16 notable takeovers. In the past four months this included Antofagasta paying $100-million to takeover Duluth Metals, Agnico Eagle paying $205-million to buy Cayden Resources and, at the upper end of the scale, Tahoe Resources’ $1.2-billion bid to acquire Rio Alto.

“Finally, energy prices have been slashed and energy is the single biggest component of the operating cost of a lot of mining operations,” he commented. “So then, when you add this up, we should be feeling euphoria now.”