Savings Wasted by Current Resources Funding Model
Executives in charge of junior mining companies are constantly bemoaning their lack of support. In reality, they might have been treated too generously. Over the course of the cycle, their number has risen by several hundred. Depending on the chosen starting point, the increase could be as much as 450 to today’s approximately 900. Of those, hundreds are now zombie companies unable to complete any worthwhile activities and having to commit all the available funds they can muster to compliance. Let’s say it costs $450,000 at a bare minimum to keep a pre-production company open for a year and maintain its tenements in good order. Let’s also say that there are 300 companies doing nothing more than this. That comes to $540 million “over the forward estimates”, as a politician might say. The industry is getting far too much support if it is going to spend half a billion dollars over four years without going near a rock. It is hard to imagine a more inefficient use of the nation’s savings and a clearer argument for a different funding model.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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