project-gen-featured

Project Generators: Exploration Risk for a Lower Cost

Project Generators: Exploration Risk for a Lower Cost

Project Generators: Exploration Risk for a Lower Cost

Sponsored by: Altus Strategies

In a bear market for junior miners, exploration capital can be hard to come by. However, one type of company strategy does its best to bypass this risk and fund multiple projects without having to constantly raise capital through equity.

Enter the Project Generator model. How does it work? Basically, a company gets more established companies with substantial capital to joint venture on its wide portfolio of properties. The funding companies have the money to spend and may not have a depth of exploration projects themselves. Therefore, it can be a perfect match for both parties.

The downside of this model is that shareholders of the project generator do not get all of the discovery upside, but the benefits are still quite numerous. First, it decreases dilution risk by having much of the exploration capital provided by majors and midtiers. Also, it spreads the odds of making a discovery to a portfolio of multiple properties and commodities, rather than just focusing on one which may or may not work out. Last, by having the big boys come in on projects, shareholders have reassurance of the technical validity and due diligence of prospects.

There is some very supportive data for the model as well. Over the last five years, shares in project generators are up 121% while shares in listed juniors (under $50 million market cap) are down -55%. Project generators also have more skin in the game (11.0% vs. 7.6%) and are able to secure more overall funding on average.

subscribe_tovc2

Embed This Image On Your Site (copy code below):



  • Jeff Goldblum

    prospectgenerator.org

    • Thank you for the link. A bunch of good information on that site. They list a bunch of the usual culprits.

  • Surprised there is much of any interest in this niche of the natural resource market. I love this space. Thanks for putting this info graphic together. Is there anyway to get a list of all the project generators used to compile the statistics presented here? Hope it is ok that I made a little YouTube video on this presentation for my friends https://youtu.be/nyRfvoZ4Nnw please feel free to correct me if I misunderstood any part of what you are trying to convey.

Mornings are better with Visual Capitalist.coffee_email1

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.