OTTAWA (Reuters) - Crisis conditions in the commercial paper market are putting some small Canadian miners in a tight squeeze, making them look harder and pay more for credit to fund project development.

Some of these companies — without the deep pockets or cash flow of majors such as Barrick Gold and uranium producer Cameco — made big bets on the paper.

Now they are getting hurt as this supposedly safe, short-term corporate debt gets sucked into the turmoil sparked by the US subprime mortgage meltdown.

Proof that US credit market problems had spread to Canada came last month when finance firm Coventree said it could not make repayments on asset-backed commercial paper due to a liquidity squeeze. That left millions of miners' dollars in limbo.

"Cash is one of their most vital assets," said Haywood Securities mining analyst Kerry Smith. "They need the cash to advance their projects and so for some of those guys it is going to be a bit more difficult."

It may be some time before they get their money. Institutions have agreed to a 60-day standstill on the asset-backed paper and plan to convert it into longer-term floating rate notes.

Coventree's troubles have touched such miners as Baffinland Iron Mines, which is trying to develop its Mary River project in Nunavut. It had C$43.8 million of its C$45.9 million in cash tied up in notes with Coventree.

New Gold, which is developing the New Afton mine in British Columbia, had C$158.5 million in notes with Coventree, or 38 percent of its C$420 million cash.

Some are luckier. Robert Quartermain's Silver Standard had 29 percent of its C$197 million cash parked in commercial paper, but enough money remains to develop its Pirquitas project in Argentina this year and next.

It is waiting for Coventree to repay C$14 million and has a further C$43 million due by October 11.

"Our business was not impacted, we're proceeding along," he said. "I think some of our shareholders were upset that we ended up having some of this paper, but we were trying to be conservative."