As raising capital becomes increasingly difficult for junior gold companies, some of them are proposing a solution: start smaller and grow from there.

A couple of juniors have rethought their large mine development plans in recent weeks and replaced them with so-called “staged development” proposals. The idea is to reach a low level of production quickly, and use the initial cash flows to finance the rest of the construction (without having to return to the capital markets).

For miners, the key advantage is that they need less capital up-front, meaning they may avoid issuing equity while their stock prices are depressed. It also gives investors confidence that their mines could get built amid difficult market conditions.

On Wednesday, Guyana Goldfields Inc. embraced the staged approach for its Aurora gold project in Guyana.

In February, the Toronto-based miner released a feasibility study that suggested Aurora would cost a higher-than-expected US$525-million to bring into production. The stock plummeted more than 30% in the next two days as investors decided the project would be extremely tough to finance.

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