Two mineral-production projects in northern Manitoba, on the verge of pumping close to $100 million into the economy, continue to exist in a holding pattern because of devilishly stingy capital markets.
But both of them are being forced to get creative to ensure their projects land the capital they require.
One of them, QMX Gold Corp., has been trying to reopen a gold mine in Snow Lake since 2009.
Last May, it received a commitment from Credit Suisse for $45 million in debt financing, and since then, the company has been trying to raise an additional $10 million to $30 million in equity to fire up the mining operation.
QMX chief executive officer Franßois Perron said the company remains optimistic and determined to start producing gold in Snow Lake, but current market conditions are as tough as they have been in years.
"This is one of the few projects out there with permits in place, bank financing that is far advanced and technical due diligence complete but we're still looking for that last piece of equity," he said. "For the junior mining companies, this is among the most difficult market in the last 20 years."
QMX has already spent about $50 million on the Snow Lake project and maintains a staff of close to 20 people in Snow Lake. It will need to spend close to $50 million to open the gold mine.
Perron is not taking his lack of success in the capital markets personally.
The Prospectors and Developers Association of Canada, an influential organization that represents mineral-exploration companies, will table a report at its upcoming convention in March from a newly formed committee called "capital crisis."
A finance executive in Calgary who asked that his name not be used, said it's even worse for gold-exploration companies and especially bad for companies that want to get their first mine open.
"It is extraordinarily difficult for exploration companies," he said. "It's as bad as it was just after the Bre-X scandal."
After it was uncovered that core samples were falsified from a drilling project in Indonesia called Bre-X in the mid-'90s, investors stayed away in droves from exploration stocks.
A Vancouver-based independent financial services company, called Oreninc, which consults with companies and investors in the junior commodities sector, tracks all the public-offering activity in the Canadian resource-exploration field.
It produces a weekly index on deals and just came out with its weakest report yet.
The latest summary reads, "The Oreninc Index fell to the lowest level since its creation in 2010 during the week ending Jan. 10, 2013. This week was the second in a row with no brokered offerings announced and the fourth week with no bought deals. The financing market is in a significant slump and the natural-resource industry is feeling it throughout."
Perron said the poor public equity markets may have stalled, but he believes there are options on the private-financing side of things.
QMX did secure $17.5 million in bridge financing in November to pay off a previous bridge loan and to provide breathing room to get the last piece of equity in place.
"The financing I put together in November was precisely designed to give me time to go tap that private market," he said. "I am frustrated at how long it's taking me but I'm rolling up my sleeves to get that last permanent slice of capital in place."
BacTech Environmental Corp. is also looking to put together some hybrid private equity/debt financing to get its $26-million bio-leach plant in Snow Lake up and running.
BacTech intends to apply its technology to a decades-old pile of mining concentrate in Snow Lake left over from previous mining activity. It will be to produce gold from the concentrate previous processing could not do economically.
BacTech CEO Ross Orr said there are negotiations underway with a few different parties for financing and he said he is determined to see the project start construction this spring.
"We are in a series of discussions on the equity component," Orr said. "I am not worried about the debt side."
BacTech's technology has been around for some time and there is fairly solid analysis as to how much gold is in the Snow Lake deposit, so Orr said he could pre-sell some of the production to raise capital.
But when it comes to equity, he does not want to have to sell shares and dilute his current base.
He's thinking of trying to figure out a way to market his production as "green" gold because he'll be producing it without any environmental disruption -- in fact, BacTech will be cleaning up the site.
"There's conflict-free diamonds and clean coal, why not green gold," he said.