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Perth’s ‘mining boom" coming to an end

Post Date:06/11/2008 | Author: Dylan Mann

The chill blowing through Perth resources stocks has prompted investors to look elsewhere.
As many investors focus on the price action of the present stockmarket volatility, companies themselves are increasingly concerned about the capital strike: the prospect that it will continue to be very hard to raise money to fund growth.
That reality is most obviously flaying the property trust sector, but it’s also hitting hard in Perth, the home of capital-raising for mid-cap resources companies in particular.

Patersons Securities’ executive director, Murray McGill, believes we are witnessing a tipping point in economic history as the world’s primary source of development capital switches from the US and Europe to Asia. That has longer-term implications for all investors.

In the meantime, though, boom-town Perth is feeling fear again. A Perth receiver told me smaller mines are falling over at a rate of one a week. The combination of over-optimism, lower commodities prices, higher costs and the sudden capital drought is taking its toll.

Other projects are being delayed and expansion plans mothballed. Suddenly mining engineers aren’t quite so hard to find, certainly easier to find than equity capital for mid-cap miners.

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