According to EY’s report, Mergers, acquisitions and capital raisings in mining and metals 1H 2015, the largest share of unrated and junior issues over the first six month of 2015 were sub-$1 million, with 42% of all follow-on funding rights issues globally occurring on the ASX.

Proceeds were earmarked for general corporate purposes, working capital and small amounts for mining exploration.

Globally, funds raised by miners globally fell 2% to $142 billion, though follow-on raisings doubled and bond issues jumped 50%.

“Unlike the smaller end of the market, the majors are typically in a position where they can raise funds and can do so at relatively low cost if the need arises,” EY Oceania Mining & Metals Transactions Leader Paul Murphy said.

“However competition for capital is fiercer than it has ever been, with junior and mid-tier miners grappling with the challenge of risk-averse equity markets and highly selective lenders.”

Access to capital is regarded as the number one risk for mid-tier and junior miners.

Alternative sources of finance, such as streams, royalties, high-yield bonds, pre-finance offtake and equity-linked instruments, have risen over the past few years as investor interest waned.

“These have provided much-needed capital but come with additional complexity and risks,” Murphy said.

“Poorly considered financing strategies could ultimately be value destructive, so careful evaluation is required no matter how desperate for capital you are.”

Murphy advised juniors and mid-tiers to re-assess working capital to potentially free up more cash and re-examine GST fuel rebates and R&D incentives to ensure all capital that is entitled to is being tapped.

“Beyond this, these companies need to make their projects stand-out from the competition to attract the eye of counter-cyclical investors and be transaction-ready for when opportunities arise,” he said.

M&

There were just mining 14 deals in the June quarter in Australia worth $81 million, down 19% in volume and 35% in value over the previous quarter, excluding BHP Billiton’s demerger of South32.

Globally, there was a 2% increase in deal volume to 86 deals and a 13% increase in total deal value to $21.4 billion (excluding South32).

Over half the deals targeted developed countries, while 64% were domestic acquisitions.

Gold was the largest focus of deals both locally and globally, and Murphy expects that trend to continue in Australia in the current half, along with a possible rationalisation of the coal sector.

Copper deals doubled globally, while iron ore deals plummeted due to the price slump.