Junior mining companies in South Africa have fallen out of favour with investors and have been left to find their own way to profitability, a panel at the 2014 Joburg Indaba revealed last week.

Debating the challenges of growing a junior mining project, Submex Investments MD Hugh Callaghan noted that the lack of investor appetite was not purely cyclical – juniors were not providing the returns investors coveted.

Juniors were “mining the stock market” more than mining the ground, but investors wanted dividends, not promises.

“Shareholders want real returns [and] results,” DRDGold CEO Niel Pretorius added, noting that, in a volatile world, potential investors need not invest in resources to gain 5-, 10- or 15-year returns.

Mining companies were now vying for the attention of investors against the background of a diversified investment offering, with many more attractive industries globally.

The difficulties facing juniors in raising funds have led the companies to find other ways of financing their activities, added Rockwell Diamonds CEO James Campbell.

Rockwell had disposed of all its lossmaking operations and injected the capital back into the group, while refocusing on its core activities and placing the company on a quicker path to profitability.

Citing his own experiences, Callaghan indicated that a focus on small early-stage, quick-to-cash projects could boost the attractiveness of juniors.

However, African Mineral Exploration and Development’s (Amed’s) David Twist said fund and investors, such as Amed, were not interested in small projects and, despite having significant funds available, projects in South Africa were not attractive.

“[We see] very few good [investment] opportunities. We are well cashed up and ready to go,” he commented, but the company aimed to invest in high-grade, large brownfield projects that offered real returns.

“Finding good projects [that fit in the company’s investment parameters] is difficult,” Twist said, adding that the fund was seeking similar types of projects to those sought out by Rio Tinto and BHP Billiton.

Twist dismissed as unattractive commodities such as coal and iron-ore, as well as platinum – unless it was operated “outside the politics of South Africa” – and opted for gold and copper as investment opportunities.