While Australian investors generally view the ‘project generator model’ as a kind of ‘win-loss’ scenario that favours the major partner, this is actually a proven successful model used widely in Canada that provides juniors very significant leverage to exploration success with the right partner and deal structure.
There are very few ASX-listed companies adopting the project generator model, with a number that do often applying hybrid approaches.
But Kincora Copper CEO Sam Spring tells Mining.com.au the key reason Kincora is taking this route is to give the explorer’s portfolio of 12 large-scale porphyry projects the amount of drilling they require without blowing out the company’s capital structure and looking to get the numbers in favour for shareholders to make, and significantly financially benefit from, a new major discovery.
“A couple of key factors of this model for large projects like ours are minimising shareholder dilution, in terms of just having to keep coming back to market and raising money every six to 18 months, and, what is the scale of the target and prize we are looking for in order to attract such a deal structure and partner,” he adds.
“The project generator model is more of a North American accepted approach for funding. I think that concept of dilution is one that they really don’t like, particularly when exploration and risk capital is expensive, as it is in the current market.”
Kincora has recently secured five asset-level deals that unlock potentially over $60 million worth of multi-year exploration funding for the projects that the company ultimately does not have to tap equity investors for. They also receive a management fee for the largest of these deals, which gives them an income stream.
Write to Angela East at Mining.com.au
