Capital Raising

Junior resource companies need to raise capital

Capital raising is a common tool used by junior resource companies to raise share capital by giving existing shareholders the right to subscribe to new shares for cash. Equity financing is the process of raising capital through the sale of shares in an enterprise. This essentially refers to the sale of an ownership interest to raise funds for business purposes.

Junior resource companies are an important part of the exploration stage of the commodity production process, particularly in areas that have not previously yielded discoveries. Junior explorers tend to rely almost exclusively on listed equity to finance their operations and the boom in commodity prices over the past decade has meant that these companies have had little trouble raising equity. Many investors consider junior resource companies to be high-risk investments that are fraught with challenges and little chance of success.

Junior miners and explorers in their early phases don’t often receive a lot of attention from media and government, largely because they’re busy exploring and searching for funding to continue the development of their assets rather than sending out press releases to various media outlets.

Most junior resource companies have a low current cash balance, with a requirement to raise funds within a year. Most envisaged the availability of equity funding to be a major restraint in their business in the year ahead. The challenge in the industry is to find ways to raise these funds in times when equity markets are strained and fundraising for greenfield explorers has all but dried up.

GDC assists in equity financing and raising capital by carrying out targeted roadshows and using a wide network of cultivated relationships to source funds suitable for our client’s individual needs.

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