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Markets warm to junior potential

Perennial optimists they may be but the State's exploration companies are again daring to hope they may have seen the worst of the sector's elongated market downturn.

The state of the juniors will be at the forefront of the minds of delegates at the Association of Mining and Exploration Companies' annual convention, which kicks off in Perth today, as companies not in hibernation weigh their chances of raising more money in search for the next big discovery.

It is a grim time for many but some industry figures see renewed signs of green shoots.

Chris Cairns' Stavely Minerals, one of only a handful of resource sharemarket floats this year, bounced 26 per cent yesterday on the back of positive drilling results. At yesterday's 43� close its investors are well ahead on its 20¢ May float.

Gold Road has also run hard on exploration results, as have a select few others.

Encounter Resources managing director Will Robinson, who is AMEC's president, says recent takeovers of producers and companies with pre-production assets could be early signs the market is beginning to improve for small explorers.

But it remains tough to raise money, and Mr Robinson admits Encounter's farm-in deal with commodity trader Antofagasta is the major factor his company is able to keep exploring.

"You've got to be really careful about how the money is going into the ground, and you've got to see big progress to get traction in the market place," he said. "But we're seeing that with a few people - you look at Gold Road, they're up 75 per cent this month, and it looks like they've made a nice discovery. You had the Cassini deal with BHP, freeing up a major exploration asset from a major into a hungry junior.

"If we were having this conversation 12 months ago, nobody was getting a reaction to anything."

Hartleys head of corporate finance Grey Egerton-Warburton said there were some signs the market was starting to again warm to exploration stories, as highlighted by a positive response to good news.

"In particular people are hopeful about what the next 12 months is going to bring for base metals stocks," he said.

But he said it was not yet open season on speculative greenfields exploration, and investor interest was "situation specific".

"The market is not yet in the mood to fund anything and everything, that's for sure," he said.