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JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Junior Mining Sector Capital-raisings: The Effect of Information
Asymmetry and Uncertainty Issues
Author(s): Casey Iddon, Samanthala Hettihewa, Christopher S. Wright
Citation: Casey Iddon, Samanthala Hettihewa, Christopher S. Wright, (2013) "Junior Mining Sector Capital-raisings: The Effect of Information Asymmetry and Uncertainty Issues," Journal of Applied Business and Economics, Vol. 15, Iss. 3, pp. 56-67
Article Type: Research paper
Publisher: North American Business Press
Abstract:
While prospecting by junior mining companies (JMCs) is a vital contributor to modern wealth creation,
attributes of the junior mining sector (JMS) limit JMC-fund raisings to external equity (shares). In
considering responses by JMC principals to deep discounting and other JMC-investor strategies,
potential responses were found to: increase returns to principals, increase JMS moral-hazard issues, and
further deepen price discounts on JMC share offerings, especially IPOs. It is suggested that the
attractiveness and moral-hazard consequences of these potential responses can be greatly diminished if
mining-tenement fees are raised and JMC prospecting costs are allowed as an offset against those fees.
