Just how bad will this be? Mr. Gray estimates that 50% to 75% of the world's juniors will not survive.

"Companies with little cash, marginal projects and no key investor [with deep pockets] will likely lose any talent they have and will probably end up de-listing or suffer massive dilution via financing at incredibly low prices," he wrote in a note to clients.

He expects juniors will find it tough to access any capital for at least the next 12 to 18 months, and that even the best drill results will not necessarily translate into major share price moves. The lack of capital means that juniors will have to deploy much less aggressive spending budgets, and Mr. Gray noted that some companies will find it difficult to "overcome their addiction" to the wild spending days of the last few years.

Another problem Mr. Gray points out is that many of the best geologists in the industry will choose to simply retire rather than fight through the tough times. That will deplete an already small talent pool.

The juniors that will survive this mess are the ones with cash in the bank, access to more capital, and quality projects in proven and politically secure mining districts. Mr. Gray noted that these companies will be sought after by the majors for joint venture deals that allow the big companies to earn their way into projects. There were many deals like this in the 1997 to 2002 downturn, but much fewer during the boom of the last five years when the juniors did not rely on the majors as much.

Peter Koven