Why do majors like junior mining companies?
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Why do majors like junior mining companies?
Last night I revisited a book I read years ago, and it is still relevant today.
By Leon Louw for the WhyAfrica magazine
Last night I revisited a book I first read years ago, and it struck me how much of its advice is as relevant today as it was then.
There’s one section in “Understanding Junior Miners” edited by Fiona Perrott-Humphrey and published by AIM Mining Research that I highlighted all those years ago and that I worked through again last night.
In an industry obsessed with the next cycle and new technology, these lessons have stood the test of time, and every junior miner would do well to keep them front of mind today.
Why do majors like junior mining companies?
The author asks: Why do majors like junior mining companies (and I quote directly from the book):
“Lack of bureaucracy and overheads so more of the exploration dollar goes directly into the ground.
“Will work in higher risk geographic areas so majors can use them as a “window” on the region.
“Quicker off the mark to take up opportunities and make decisions in fast moving regions such as “new frontiers”.
“Allow majors to hedge their exposure to “new frontier” regions through a diversified portfolio.
Extensive local knowledge and contacts
“HAVE LOCAL KNOWLEDGE (POLITICAL, GEOLOGICAL, CULTURAL) AND LOCAL CONTACTS.
“Prefer those with a large deposit that represent long life mines with possible blue-sky potential.
“The availability of credible management that is prepared to assess economic viability of actual mining not just continue to prove up reserves to “mine the market” and their in-house geologist can tend to do.”
Image: Exploration drilling by a junior mining company in a remote corner of Africa. Image credit: Leon Louw for WhyAfrica
Why do majors like junior mining companies?