Capital Markets Thaw Signals Developer Financing Renaissance

• Traditional financing structures are returning as $4,100 gold enables developers to access debt-equity packages at reasonable rates, replacing the exotic private equity and streaming arrangements that dominated recent years
• Nine-figure equity financings now occur weekly with generalist institutions like Fidelity participating beyond traditional resource investors, signalling "the generalists are coming" and expanding available capital pools materially
• Troilus Gold's expanded debt facility demonstrates developers can credibly finance construction independently rather than depending entirely on takeovers, strengthening negotiating positions while avoiding permanent project impairments
• Tax loss selling is absent this year because the vast majority of mining equities are substantially higher than purchase points, though seasonal liquidity constraints from holiday spending may still create temporary year-end dislocations
• Flow-through financing activity will accelerate through December 31st as funds race to deploy 2025 capital before their fiscal deadline, working down the capitalisation spectrum from larger visible companies to progressively smaller explorers

The junior mining sector stands at an inflection point as traditional project financing structures re-emerge after years of exotic capital arrangements. In their latest Compass podcast episode, Sam Pelaez, President, CEO and CIO of Olive Resource Capital, and Derek Macpherson, Executive Chairman of Olive, dissect the market dynamics heading into year-end and examine how materially lower costs of capital are enabling developers to advance projects independently rather than relying solely on takeover scenarios.

Recording on November 19th, Pelaez and Macpherson provide their perspective on seasonal market patterns, the return of nine-figure equity financings, and what Troilus Gold's expanded debt facility signals about the broader financing environment for advanced development projects.

Seasonal News Flow and Market Dynamics

With approximately one month of meaningful market activity remaining before the holiday period, Pelaez outlined what investors should expect from news flow patterns. "This is typically a period where we get a lot of news flow, but kind of light on substance," he explained. Companies have already reported summer drill results and completed Q3 financial reporting, leading to thinner substantive announcements.

The autumn capital raising cycle has largely concluded, with significant financings closed in September and October when gold prices were elevated. However, that capital hasn't yet been deployed to actual fieldwork. "If you're a CEO of a company that just got a big balance sheet injection, you're not really going to get any work done in November, December," Macpherson noted. "So to sate your investors, you know, you're going to want to say, 'Hey, look at me. I have a project still. I'm doing stuff.'"

The result will be a steady stream of programme announcements, soil surveys, and planning updates - genuine operational progress but not the drill results and major milestones that typically move share prices materially.

The Traditional Flow-Through Window

Beyond the hard dollar financings already completed, Macpherson highlighted an additional capital raising dynamic that will unfold through year-end. "If you have your favourite Canadian explorer, it's probably going to raise flow-through between now and the end of the year," he observed. Flow-through funds that raised capital in 2025 must deploy those funds before December 31st, creating a year-end rush for eligible placements.

Pelaez noted that larger flow-through deals typically occur earlier with greater visibility, while funds work their way down the capitalisation spectrum as the deadline approaches. "Typically the month of December you see a rush of the smaller flow-through deals," he explained, adding that this will generate additional news flow around financing announcements even as operational updates remain light.

This creates a predictable pattern where larger, more visible companies receive flow-through allocations first, with progressively smaller companies accessing this capital as funds race against their deployment deadline.

Tax Loss Selling - Or Lack Thereof

A notable departure from historical patterns is the absence of meaningful tax loss selling pressure this year. For the past 15 years, November and December traditionally saw sustained selling pressure as investors crystallised losses for tax purposes. "It felt like we came out of the Precious Metals Summit, tax loss selling started for the year," Macpherson recalled.

However, 2025 presents a different dynamic. "It's pretty rare that your resource company isn't up this year," Macpherson stated. With the vast majority of mining equities substantially higher than earlier purchase points, there simply aren't the accumulated losses to harvest for tax purposes.

Pelaez confirmed this assessment:

"We haven't seen any evidence of tax-related selling in our sector for the obvious reason that the vast majority of issuers are substantially higher than they were the past few years when people would have bought them or even earlier this year."

The consequence of absent tax loss selling is that investors may not see the dramatic year-end bargains that sometimes emerged when quality names with temporary issues were "completely demolished during this season only to rebound strongly right into the second or third week of January," as Pelaez described.

Derek Macpherson & Sam Pelaez of Olive Resource Capital

Seasonal Liquidity Constraints Create Opportunities

While tax loss selling may not materialise, other seasonal factors still create potential dislocations. Pelaez outlined the structural dynamics: "There's a very strong seasonal factor that doesn't change regardless of what equities do and that is Thanksgiving in the US with all the associated travel and expenses, the Black Friday obsession with purchasing stuff, and the Christmas period, all of which really put a strain on the majority of people's pockets."

Reduced marginal investment capital during this period can impact pricing even when the amounts seem small in absolute terms. "In our markets, the last marginal dollar sets the price for everyone," Pelaez explained. "So you're taking away some of those dollars and naturally it will have an impact."

For professional investors with permanent capital, this creates opportunity.

"For institutions like us where we have permanent capital, we have the ability to take advantage of any dislocations, temporary dislocations that occur in periods like this," Pelaez noted, describing it as "our Black Friday."

Macpherson emphasised the importance of entry points: "You make money when you buy the used car, not when you sell it to the new owner. You have to be very aggressive with that initial purchase price to guarantee yourself or to give yourself the best chance to succeed in the future."

Troilus Signals Financing Environment Transformation

The most significant development discussed was Troilus Gold's announcement of an expanded debt facility for their Quebec copper-gold project. Having raised $172 million in equity at the beginning of November - which Pelaez characterised as "by any definition the complete equity check that's required for the development of the project" - Troilus is now pursuing additional debt capacity.

Beyond company-specific implications, Macpherson sees this as signalling a fundamental shift in project financing availability.

"We are back in a market finally where you can develop your own project. You're not entirely dependent on a takeover to be able to develop the project."

The transformation centres on cost of capital. When Troilus management discussed their financing strategy a year ago, they were contemplating a complex structure including expensive streaming arrangements, royalties, equity, and debt - typical of the exotic financing packages required during the recent difficult market environment.

"If you ever look at one of their financing packages," Macpherson said of private equity structures like those from Orion Mine Finance, "they're making 20-plus percent on the money that goes out the door guaranteed - forget about equity performance, whether that's in the form of warrants or interest payments or structuring payments."

Recent mine builds including Blackwater, Greenstone, and Skidegate all required "very exotic, very complicated, multiple moving parts" financing structures, as Pelaez described.

Traditional Debt-Equity Structures Return

What's changed fundamentally is that at $4,100 gold, project profitability has increased materially, bringing down the cost of capital. "The mine becomes more profitable, the cost of capital should come down. That's Finance 101," Macpherson stated.

For Troilus specifically, the German government guarantee available for copper projects has made traditional debt financing substantially cheaper than streaming arrangements. This allows Troilus to "take the streaming piece out or potentially reduce the streaming piece materially, and that makes it more attractive for a takeout after you're built," Macpherson explained.

He drew parallels to the 2009-2012 period when single-asset companies including the original Osisko (building Malartic) and Detour Gold utilised traditional debt-equity financing packages. "That's actually what made them attractive as takeouts - they didn't have permanent impairments on the project in the form of royalties, they didn't have these exotic structures they had to work through."

Both projects were eventually acquired after completion, but their clean capital structures made them more valuable takeover targets than assets encumbered with permanent streaming arrangements or complex private equity participations.

Equity Capital Availability Completes the Picture

Beyond debt becoming available at reasonable rates, the equity portion of project financing has also become accessible. Macpherson noted that nine-figure equity financings were "incredibly rare" a year ago, with perhaps only the best companies able to execute them. "Now it's like once a week we see a nine-figure financing go up."

Critically, these large financings are accessing capital beyond traditional resource-focused investors. "Soon as you get over nine figures, generally speaking, you are outside the resource space. You're outside the traditional pool of resource capital," Macpherson observed. "The generalists are coming."

Pelaez recalled a pivotal moment two years prior when Ivanhoe Mines closed a $250-500 million equity placement with Fidelity and other large New York institutions. "It's been so long since we had a placement like this. This is probably the start," he remembered discussing with Macpherson at the time. "There's very smart people at these big institutions that are not mining-focused, but they can smell where the puck's going."

That proved prescient, with markets trending upward since Q4 2023.

"2024 was more gradual, 2025 has been explosive, but since Q4 2023 we've pretty much been on a very solid uptrend for gold predominantly but also for copper," Pelaez summarised.

Building as Negotiating Leverage

The combination of available equity and debt capital at reasonable rates creates an interesting dynamic for developers who may still prefer acquisition as their ultimate exit. "Until then, we've got to proceed like we're going to build it," Macpherson stated, describing the developer mindset.

Companies like Troilus that can credibly demonstrate they've secured financing and are proceeding toward construction create urgency for potential acquirers. "If you really want it, you've got to go after it now," Macpherson explained. "They're going to get permits here shortly because they're one of those focused projects from the Canadian government."

This negotiating leverage represents a significant shift from recent years when developers were almost entirely dependent on takeovers because independent financing wasn't realistically available regardless of project quality.

Pelaez emphasised the importance of companies actually constructing mines rather than perpetually awaiting acquisition. "In the previous cycle we had many companies do this, and some of those are the companies we have today. If in the last cycle they hadn't done it, we wouldn't have all those companies."

The current mid-tier producer space is "predominantly populated today by companies that actually had the guts in the previous cycle to go out and build something," he noted. Without periodic waves of development, the industry would face a severe shortage of production as existing mines deplete.

Macpherson reinforced this point: "At some point someone has to build something. This is a depleting industry. You can only drill so much on your existing projects. There's only so many small projects that you can kind of pass around."

Industry Implications and Outlook

The implications extend beyond any single project. Traditional banking institutions have long been willing to finance mining projects but were constrained by developers' inability to assemble the equity component without destroying their capital structures. "They don't care about whether it's mining or infrastructure or an airport," Pelaez explained. "The issue they've always had was not an unwillingness to lend. It was just the difficulty for the mining issuer to put up their equity portion of the deal."

With both debt and equity capital now accessible at reasonable rates, a select group of well-positioned developers may choose to advance independently rather than waiting for acquisition. This doesn't eliminate M&A activity - in fact, clean capital structures may make these projects more attractive takeover targets post-construction - but it does alter the negotiating dynamics and timeline considerations.

Looking toward year-end, both speakers anticipate continued seasonal patterns despite the absence of tax loss selling. Light news flow, reduced liquidity, and holiday distractions may create temporary dislocations in quality names, providing entry points for patient investors ahead of what typically proves a strong Q1 for resource equities.

As Macpherson noted from the Benchmark conference in Los Angeles where he was recording, "There's lots going on in the space" even during the seasonally quiet period, with topics including Tether's expanding royalty involvement warranting future discussion.

TL;DR:

Troilus Gold's expanded debt facility signals the return of traditional project financing structures as lower costs of capital enable developers to advance independently rather than relying solely on acquisitions. Nine-figure equity financings now occur weekly with generalist institutions participating, while absent tax loss selling and seasonal liquidity constraints may create year-end entry opportunities ahead of typically strong Q1 performance. The combination of available debt and equity capital at reasonable rates is unlocking development decisions that populate the mid-tier producer pipeline.