TORONTO — Junior base metal mining companies are finding it tougher to obtain financing, with more merger activity likely as companies seek to mitigate risk, according to delegates at the Prospectors and Developers Association of Canada (PDAC) convention in Toronto.

Many delegates from junior metal mining companies told AMM that it is difficult to find funds in the current economy, with talk of a "capital strike" occurring.

"Financing is difficult—near impossible. But good projects with good potential that are well managed always raise money," said Luquman Shaheen, chief executive officer of Panoro Minerals Ltd., Vancouver, British Columbia

These thoughts were echoed by Sandstorm Gold Ltd. chief executive officer Nolan Watson. "It’s a tough financial market out there for mining companies, but there is capital out there for good projects," he said in a March 5 presentation. "Just like the only way you’re going to get the girl is if you convince her you don’t need her, the only way you’re going to get equity financing is to convince people you don’t need it."

Tight capital markets mean that "juniors may have little choice than to consider ‘mergers of equals,’" according to PricewaterhouseCoopers LLP Transaction Services partner John Nyholt.

"We expect to see more mergers and (joint ventures) as companies are less likely to go it alone on a big project," he said, citing HudBay Minerals Inc.’s Constancia copper mine in Peru as an example of a company looking to mitigate risk by finding a partner in the operation.

Nyholt added that while "deal activity will remain low" in 2013, his company expects to see more major mining companies divesting noncore assets. "It’s all about sharpening the focus of the company and reducing overall risk," he said.

Meanwhile, Watson presented research suggesting that companies that say their mine projects will be completed within a year are wrong 78 percent of the time, and even projections of eight months until completion typically run an additional eight months from the forecast completion date.

"If you are building something complex, it will take longer than you think, it will cost more than you think and it will not work the way you expect it to when you get it started," he said.