(Repeats story published Monday; no changes to text)
By Euan Rocha, Nicole Mordant and Jim Regan (Australia)
TORONTO/VANCOUVER/SYDNEY, Aug 23 (Reuters) - Many of the
world's junior miners are laying down their picks and shovels to
start new ventures ranging from egg exporting to medical
marijuana farming, as they as try to survive a crash in metals
prices by shifting away from exploration.
Prices for copper, gold, iron ore, coal and almost every
other metal have collapsed, stalling exploration work and
hitting early stage miners particularly hard. These firms
typically find the deposits that larger miners often then go on
to acquire and develop into mines. But there's scant demand for
new sources of metal now.
Pivoting into other businesses has happened during mining
funks in the past, including a spate of defections into the tech
sector during the dotcom boom in the late 1990s. But now the
concern is that when prices eventually do rebound, there will be
fewer junior miners, and a reduced pool of new mine prospects.
"No one has any interest in a grassroots exploration project
right now," said Yari Nieken, chief executive of Chlormet
Technologies PUF.CD , which has bought an e-cigarette company
and has a license to grow medical marijuana pending.
Canada made it legal to buy marijuana from licensed
producers with a doctor's prescription in 2014. Regulator Health
Canada estimates that the Canadian medical marijuana industry
will reach C$1.3 billion (US$987 million) in a decade.
Canada's Century Iron Mines FER.TO , whose mining projects
are backed by two major Chinese companies, Minmetals and Wuhan
Iron and Steel Corp (WISCO), owns development stage iron ore
assets in eastern Canada. In July, Century started a new
independent venture to distribute Australian eggs in Hong Kong,
Macau, and potentially mainland China.
Century aims to piggyback on Australia's move from a
reliance on mineral exports to shipping food and agricultural
products to a growing Asian middle class.
"Due to the downturn in commodity prices, Australia's moving
its focus from mining to dining," said Century CEO Sandy Chim.
"We're just an exploration company, but we have a solid balance
sheet, and we feel we can also do the same.
"We see a good opportunity to start a small, but meaningful
food distribution business that can capitalize on our network in
China."
The shift to egg distribution will help create a cash flow
generating business until iron ore prices recover, Chim said.
While Century isn't turning its back on mining, it's considering
buying food production assets, such as fisheries, while it waits
for the sector to rebound.
This business shift by miners is most visible in Canada,
home to the majority of the world's publicly-listed miners, but
is also seen in other mining centers like Australia and Brazil.
ABANDONING SHIP
Century may be able to ride out the cycle, but some of its
smaller peers both in Canada and overseas have begun to abandon
the mining sector altogether, as it becomes increasingly
difficult to raise financing.
In January, Brazil's All Ore Mineração SA decided to end its
commodities operations and enter the cosmetics and hair-care
markets by buying Sweet Distribuidora, also known as SweetHair,
in an all-share, no-cash deal. The new company, renamed Sweet
Cosméticos SWET3.SA , hopes to sell beauty products developed
using biotechnology and nanotechnology.
In March, TSX Venture-listed Sabre Graphite bought
DraftTeam, a website offering fantasy sports games. It has since
changed its name to DraftTeam Daily Fantasy Sports Corp DTS.V .
Australia's Erin Resources ERI.AX , which was previously
exploring for gold in Senegal, has ventured into the medical
marijuana business.
Supreme Pharmaceuticals Inc SL.CD , formerly a copper and
gold explorer with projects in western Canada, is also seeking a
license to grow medical marijuana in Canada and has bought a
greenhouse facility in Ontario.
"With the downturn that the mining industry has suffered, I
think the smart and innovative entrepreneurs in the sector are
looking for other asset types that can rebuild businesses and
restore lost value for shareholders," said John Fowler,
Supreme's Chief Executive.
Australian-listed International Goldfields IGS.AX , which
is investing in medical marijuana assets overseas, has seen more
trading activity in its stock since it moved away from mining,
according to director David Tasker. The shares trade for less
than a cent each.
The company said its gold investment in Brazil and joint
venture in the U.S. were offering limited value to its
shareholders.
"Also, the level of support we could expect from the capital
markets was very, very minimal, if not all together
non-existent," Tasker said. "Once that reality dawned, it was
incumbent on us to look for alternatives."
The hundreds of largely TSX Venture-listed exploration
companies have been among the hardest hit in the current
downturn, as investors have fled the sector due to prolonged
decline in metal prices. Those tough conditions also mean that,
cash-strapped larger rivals aren't willing to invest in new
projects.
Some institutional and retail investors, while dismayed by
the collapse in exploration company values, are sanguine about
the shift away from mining.
"I didn't buy this stock thinking I was investing in the egg
distribution, but I've no problem with them doing other things,"
said Ian Morrison, a retail investor who owns more than 500,000
shares in Century, the iron ore miner turned egg distributor.
"I look forward to seeing what their next move will be
because I do not think they are putting everything they have got
into Aussie eggs."