By Alistair MacDonald 

Gold Canyon Resources Inc. has 5.1 million ounces of gold and 26 million ounces of silver underground on property in Northern Ontario. It owns little else.

The Toronto-listed company is part of a generation of junior mining companies that has gone into hibernation. Rocked by a three-year-old mining downturn, these companies have reduced themselves to skeleton staff, locking up their properties and stripping out almost all costs.

Junior miners, which are companies that specialize in exploration or small-scale mining, are in a position to sit out a slump because they often have little debt, few big costs and the ability to hire out their machinery, such as drills. That is unlike the industry giants, from Freeport-McMoRan Inc. to Rio Tinto PLC, which have big debt piles and large, high-cost operations to maintain.

Those qualities have allowed the junior mining sector to defy predictions of widespread bankruptcies. Nonetheless, the downturn has stalled their exploration, historically a major contributor to new supply of metals, from gold to copper.

An industrywide pullback in exploring for nonferrous metals reflects in part the juniors' dormancy. Globally, the sector's exploration budget shrank to $11.4 billion in 2014, roughly halve of the $21.5 billion earmarked in 2012, according to a report by SNL Metals & Mining.

Gold Canyon, which was founded in 1985, had just completed its exploratory drilling when the downturn hit full stride in 2012, sending share prices tumbling and steering investors and banks away from many new mining projects. The next step for Gold Canyon was to be a study to determine how economical it would be dig out the gold and silver--but that was put on hold. Such feasibility studies can cost up to $15 million.

"We have cut to the core," said Ron Schmitz, a director at Gold Canyon with more than 20 years of industry experience.

Gold Canyon, which had built a 60-plus person camp in northwest Ontario, now has just a "couple of guys" there to keep any intruders out, said Mr. Schmitz. The company recently raised money and has no debt, allowing it to ride out the downturn. But it still has costs.

"It's about $150,000 a year just to exist," Mr. Schmitz said.

Earlier this month in Toronto, Mr. Schmitz joined over 23,000 others in the mining industry, largely from the junior sector, for the annual Prospectors & Developers Association of Canada conference. Most were looking to raise money to restart their projects. Most would return home disappointed.

"There is no money walking the floor," said Richard Cushing, who works in investor relations at Monument Mining Ltd, a Canadian gold miner.

Because mines typically take years to develop, skimping on exploration could translate into meager supply growth down the road. But if in the meantime demand picks up in a notoriously cyclical industry, miners may find themselves scrambling to boost production.

Among PDAC attendees, Everton Resources Inc. also is trying to hold out by shrinking operations and putting exploration on hold in the Dominican Republic. In 2012, the gold miner had up to 20 staff and hired teams of contractors to drill, explore and test samples. Now it has around eight employees and is doing little in the way of digging out its gold or exploring for new assets.

"We sit and wait till the markets allow us to raise money," said Sabino Di Paola, the company's finance chief.

Since its peak in April 2011, the Global X Junior Miners ETF index has fallen about 78%. From their price peak, gold is down 38%, copper off about 42% and iron ore down 70%, according to the Steel Index.

At the end of January, Toronto-based exchange TMX Group was home to 1,485 miners, of which 80% were listed on the TSX Venture junior exchange. All of these miners combined had a market capitalization of $266 billion, less than half of their peak value reached in February 2011.

Of miners' total market capitalization on the TMX in 2015, only 3.7% represented companies listed on the junior exchange, underscoring how badly these miners have been hit.

For some, even a junior exchange listing--which for Gold Canyon runs about $35,000 a year--has become a luxury. Last year, 44 miners asked the TMX Group to delist them from Canada's various exchanges. That was double 2013's number and well over the 10 miners asking out in 2010 when the mining boom was in full stride.

Delisting can be a risk for investors, who already are holding portfolios of hibernating and illiquid miners, as it wipes out the remaining equity value of the holding.

For some ill-fated miners, their listing is all they have left.

Peter Cunningham is the founder of Lions Edge Capital, a Toronto-based corporate advisory firm that specializes in enlisting miners in so-called reverse takeovers. Last summer, Lions Edge brokered a deal in which tech company Smart Fleet bought Golden Virtue Resources Inc, a lithium exploration company, and reversed into its TSX Venture Exchange Listing.

Reverse takeovers have seen miners supplanted by tech companies, retailers and potential suppliers of medical marijuana, as companies in these sectors look for a cheaper way to get a listing.

"You have a public company that cost $200,000 a year to keep listed, with no money, drowning in debt, so it is easy to have a conversation" said Mr. Cunningham, who attended the PDAC conference this month.

Write to Alistair MacDonald at alistair.macdonald@wsj.com

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