Why Some Mining Projects Get Funded and Others Don’t

Why Some Mining Projects Get Funded and Others Don’t

Stephen Burega explains why strong mining projects do not always attract capital, and how management, market conditions, project quality, restructuring and drilling results influence investor decisions.

Why Some Mining Projects Get Funded and Others Don’t | Mining Investment

Why do some mining projects attract capital while others stall? Stephen Burega explains the role of management, data, drilling and market conditions.

A strong exploration target does not automatically attract capital. Stephen Burega explains why some mining projects get funded while others stall, how investor behavior has changed, why management track record matters, and why companies need to move from data and storytelling to real drilling results.

I see a lot of very promising projects that, for some reason, don't raise money and don't move forward, even though they're good.

And vice versa, sometimes there is a project where the data isn't that strong, but for some reason they move forward.

Why does it happen?

And if you were to raise money for an early-stage exploration project with the experience that you have right now, what would be your workflow?

The financing aspect in the Canadian context is that the Canadian investor has typically been a buyer of private placements and an opportunistic seller, riding warrants.

That has been the typical world for us for the past 10 years.

Everyone has expected to see shares coming into the market because people are trying to be opportunistic and get their money out.

And the days of a long-term investor aren't as obvious to me as they once were.

So that's been a difficult aspect of financing in Canada over the last decade.

Now, that being said, what's happened in the last eight to 12 months is a very different departure.

The access to capital over the last year is extraordinary, and it feels akin to what we saw the last time we had a big market.

A freer flow of capital, a stronger interest from shareholders to participate.

The quality and caliber of shareholders that participated in Oreterra's raise is exceptional.

When we look at the share registry of who participated in our last $9.7 million raise, we are so fortunate because they're real investors with a deep understanding of the industry and a willingness to be long-term investors.

So that's important.

Sometimes you can get out there and you see, as you pointed out, potentially lesser stories raising capital.

There's been a model of raise money, spend the money, raise money, spend the money.

If you have an inability to raise capital in this particular market, I think it's telling of the asset base, because I haven't seen an active market like this in a very, very long time.

So, in other words, if you can't raise money in this market, move on to the next target?

I didn't quite say it that way.

But I think it always comes down to who's telling the story.

The reality is that the management team and their past successes are extremely important.

And in some cases, you have a management team or a promotional group behind a story whose past experience has been very positive, and their ability to raise money is a different storyline.

If we hadn't done everything at Romios, Romios wasn't going to be successful in raising this money.

So I'd be the first to put up my hand and say, if I was just on my own right now with 350 million shares outstanding and a million and a half dollars of debt, there was going to be a reckoning for this company.

A big change was needed, and we accomplished everything we planned.

We've now got a clear line of sight on building an extraordinary story at Trek South.

But it took a lot of energy and a lot of commitment to make those necessary changes that not every company is willing to make, or to do it in the method that we chose to do it.

If you've got a big asset, you've got a strong story to tell, I think you can raise money the likes of which we haven't seen in a very, very long time.

And the second aspect of your question was: what's the flow?

I think there is a tried-and-tested model of gathering your data, building your case, and getting to drilling.

And in this world, I think if you're not able to get to the drilling point quickly and show real results, you're going to have a fickle investor who's not going to be as supportive, maybe, in the long term.