Money is required through each step of the development of a potential mine.
The prospector requires money for a prospector’s licence and the materials he or she needs to go exploring.
To keep a mineral claim in good standing, the government land owner requires that prospectors and exploration companies spend a minimum amount of money just to keep the claim. If they do not, the claim lapses, is turned back to the government, and freed up for another person or company to step in.
Junior mining companies – companies that explore for deposits but do not own operating mines – often require larger financial backing. This is because at this level of exploration, companies operating in the remote north are faced with higher costs. For example, drill rigs are helicoptered to targets. In rare cases, individuals are willing to cover these costs but it’s a high-risk investment. The junior’s preferred method is to acquire financing is by raising capital through public stock markets. This route spreads the risk allowing potential investors to buy shares.
Another route is to obtain financing from larger global resource companies. In some cases, the larger company funds the junior’s exploration costs for a share of potential future wealth. Or, the larger company may offer to purchase all the shares and ownership of the junior.
Critical to the entire enterprise is a system know as free entry which allows a prospector or explorer to enter onto public lands to search for minerals.
In the North, it is estimated that approximately 30 per cent of the land is unavailable for mineral exploration. This includes lands off limits due to conservation, land claims, and land use plans. Limiting access to land reduces the probability of exploration success.