By Melissa Pistilli-Exclusive to Silver Investing News

The global credit crunch is forcing mining companies to turn away from skittish banking institutions to public offerings to raise the money needed for acquiring new properties, advancing projects and paying off debts.

Recently, a slew of precious metals producers have decided to take advantage of rising investor interest in gold and silver to obtain capital including Pan American Silver Corp. [NASDAQ: PAAS], Hecla Mining Company [NYSE:HL], Kinross Gold Corp. [NYSE: KGC], and Silver Wheaton Corp. [TSX: SLW].

Both silver and gold have taken on a more attractive shine for investors since the new year as the global economic crisis deepens. The spike in prices has led UBS AG, the world’s largest manager of private wealth assets, to revise its 2009 precious metals forecast this week. The global financial services company has said gold and silver will average US$1,000/oz and US$14.75/oz respectively this year. UBS also stated that precious metals remain its preferred commodity investment.

According to Bloomberg, “silver is the second-best performer this year among the 19 raw materials on the Reuters/Jefferies CRB Index” and Canadian miner Pan American is hoping that will entice investors to buy the stock it’s offering to raise the funds needed for acquisitions and expansions.

This week, Pan American announced it is selling shares to raise $103.5 million. The company has planned an initial sale of 5,540,000 common shares at a price of US$16.25 per share for a total of $90 million and will allow its underwriters, Goldman Sachs Canada Inc. and CIBC World Markets Inc., the option to sell an additional 831,000 shares at $16.25 per share for the remaining $13.5 million.

Hecla also announced this week it is looking to raise US$65.6 million by selling 32 million units at $2.05 per unit. Each unit represents one common share and one-half common share purchase warrant. Each whole warrant gives the option to buy one common share in Hecla at a price of $2.50 per share between August 10, 2009 to August 10, 2014.

The Idaho-based silver producer needs the funds to repay its $40 million bridge loan and for “general working capital requirements.” President and CEO Phillips S. Baker, Jr., has said, “With no principal amortization payment dates in 2009, we will focus on driving our costs down and growing our production and reserve base.”

In January, Kinross Gold announced it was offering up 20.9 million shares at $17.25 per share to raise about $360.5 million “to enhance the company’s capital position following the funding of recent acquisitions.” Silver Wheaton also managed to raise C$250 million at C$8 a share “to repay [its] revolving debt facility and for general corporate purposes.”

Most producers would prefer to do debt financing over equity financing, but with the current credit crunch banks are not willing to loan cash to businesses.  As a result, the mining companies are forced to issue stock thus diluting their ownership.  This situation is made worse because the producers are trading at a fraction of their former value so they are in essence forced to sell portions of their company for pennies on the dollar of what it was once worth. Although this is obviously not a welcome circumstance to mining execs, it offers an excellent opportunity for investors to advantage of valuable mining stock at bargain prices.

Thursday morning silver reached a high of $12.95/oz. Shares of Pan American were trading at $16.73 on the NASDAQ, down from a 52-week high of $44.10. Shares of Hecla Mining were trading at $1.81 on the NYSE, down from a 52-week high of $13.14. Shares of Kinross Gold were trading at $18.06 on the NYSE, down from a 52-week high of $27.40. Shares of Silver Wheaton were trading at C$8.19 on the TSX, down from a 52-week high of $19.30.

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