Minerals provide resources for life. They’re the raw materials used to build, care for and sustain our world. Junior mining companies search for new sources of these essential minerals. They’re dynamic companies and depend upon the capital market and investors. Junior mining companies are usually small-scale operations that are just beginning their progression toward becoming full-scale miners. These companies take great risks. They provide great opportunities.
What is a junior mining company?
A junior mining company is a small, early-stage mining company in search of new deposits of gold, silver, uranium or other precious metals and/or minerals. They provide the groundwork for the future supply and demand of attractive exploration projects and heavily contribute to the exploration and development of the mining industry. Junior mining companies:
- Are typically lower market cap ($1 million to $500 million) and thinly traded exploration companies.
- Stocks tend to be volatile and less liquid.
- Are often considered growth stocks.
- Frequently rely on venture capital to secure financing.
- Typically engaged in mineral exploration and development.
- Main goal is to discover significant deposits and develop resources.
- Seek potential opportunities by acquiring properties that can yield large resource deposits.
- Are speculative by nature.
- Often start off as private companies and then go public to raise capital for exploration.
- Usually highly-leveraged companies with smaller market capitalizations and smaller asset bases.
- Are typically high-risk.
What are the aims of a junior mining company?
Similar to all businesses, junior mining companies hope to make money. To do this they:
- Identify an asset with potential commercial value
- Search for deposits of this asset
- Seek financing to work toward production
- Often use IPO (Initial Public Offering) to raise capital for exploration, development and production
- Frequently aim to be acquired by a larger mining company, for profit
How do junior mining companies benefit the mining sector?
Junior mining companies contribute to the mining sector by:
- Providing access to new deposits: Major mining companies allocate small portions of their revenue to exploration. Their main expenditures are invested in the development of existing mines and the reduction of operating costs. Junior mining companies contribute to the exploration and development of the mining industry by providing the groundwork for future supply and demand of exploration projects. They act as an exploration pipeline for major mining companies that are looking to acquire mineral projects to put into mine production. They locate mineral anomalies and samples to confirm or deny the find, then work toward development and production.
- Providing a preselection of promising new sources of commodities: Our everyday lives are filled with objects that began life as a mineral (cars, computers, mobile phones, bicycles, toothpaste, tin cans/metal lids, etc.). As we move toward clean energy sources (solar, wind, water), the demand for minerals increases (rare earth elements, graphite, lithium, etc.). Junior mining companies find new sources of these commodities, providing a preselection of these resources for our current and future needs.
- Providing economic/employment opportunities: Junior mining companies bring significant economic opportunities to the areas they explore and develop (contracts for planes/helicopters, mining jobs, support services, purchase of goods and services in the area, etc.). Mining boosts community development and local skills, knowledge, innovations and opportunities. It increases the number of jobs, wages and community funding in local towns and regions. The presence of mining companies often results in increased infrastructure (rail lines, hydroelectric transmission lines, etc.). A junior mining company may even create spin-off exploration projects that provide employment and business opportunities for an area.
Junior mining companies are an integral part of the mining sector. They find and develop new deposits, providing the groundwork for future supply and demand of exploration projects. They discover sources of commodities needed for our changing needs and provide economic and employment opportunities in the areas they explore.
Interested in mining activities and investment opportunities? Check out Junior Mining Hub. We’re a rapidly growing, open-access platform highlighting industry events and activities throughout the junior mining sector. Our categorized, searchable information provides a cohesive industry picture. We use our years of industry experience to promote mining activities and investment opportunities to the global community. Contact us today or sign up for our daily email and/or our weekly newsletter.