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eResearch Project Generator Industry Report - Portfolio Investing in Mining to Improve Gains While Reducing Risk

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Chris Thompson, Director of Research at Toronto-based-eResearch, has published a report on Project Generator companies in the mining industry

Additional Information:

Company: eResearch
Date Published: Oct 2, 2019
Transcript: Available

Video Transcript:

I’m Fiona Forbes for Investmentpitch Media

Chris Thompson, Director of Research at Toronto-based-eResearch, has published a report on Project Generator companies in the mining industry.

As everyone knows, investing in junior mining companies is a high-risk proposition, as it is estimated that for every 500 to 1,000 grassroots exploration properties, only one property will become a mine.

Therefore, the chances of picking a winner and being rewarded with exceptional returns are almost impossible through investing in a mining exploration company that focuses only on a few projects.

These risks are exacerbated as most junior mining companies focus on a few key projects, perhaps in a single geographic area, and usually on one commodity group, such as precious metals, base metals, battery metals or industrial metals.

This places these companies at the mercy of geopolitical risks and commodity prices, which are outside their control.

A good example of a boom-bust swing in commodity prices can be illustrated by the recent fluctuations in the price of cobalt.

Even a successful exploration project can take 10 years to explore and develop, requiring hundreds of millions of dollars of capital, resulting in significant dilution as millions of shares are issued to finance the project.

One way to increase your odds is by investing in a Project Generator company.

eResearch’s report presents an overview of 32 companies considered Project Generators before spotlighting 4 companies you should consider adding to your portfolio.

We’d like to present a brief synopsis of the report, which is available on www.eResearch.com.

Let’s start by looking at the role of a Project Generator.

A Project Generator company searches for properties that they believe, through its knowledge of geology, has potential to become an economic mineral deposit.

A Project Generator will advance the project by completing early-stage work such as geological mapping, geochemical sampling and geophysical surveys while they seek a Partner on the project who will incur the costs to undertake the next phase of the project – the more expensive drilling.

At any given time, a Project Generator has a portfolio of projects at different stages that can be optioned out to a Partner, thereby avoiding dilution by utilizing a Partner’s capital to advance the project.

How does a Project Generator create value for its shareholders?
- Share price increase, which may be a result of revenues generated from cash payments or royalties from the Partners.
- Spinout, when PG shareholders receive shares in a new company which results when a project reaches critical mass and becomes a separate listed company.
- Acquisition, when a Partner purchases a project to get full control.


Most Project Generators focus on projects in top-ranked jurisdictions such as Canada, Australia and the U.S.A.

The Fraser Institute’s Mining Investment Attractiveness Index is the go to place to research various jurisdictions, with this chart showing the top 20 jurisdictions.

It is always important to ensure projects are in safe regulatory jurisdictions.

This chart shows the companies with projects in several safe jurisdictions.

As this chart shows, many Project Generators have projects that include a number of different commodities.

Given the many variables, valuing mining assets is difficult for single projects, and become exponentially more difficult for Project Generators with numerous projects at different stages of development.

In the report, eResearch provides more in-depth analysis of the different valuation methodologies including cash flow analysis valuation, equity portfolio valuation and property valuation.

If you would like to add one or more Project Generator companies to you portfolio in order to gain exposure to various commodities while avoiding the risk of investing in mining companies that target only specific commodities through limited projects, eResearch briefly discusses 28 companies in its report with in-depth discussion of the following 4 companies:

Globex Mining Enterprises, based in Quebec and primarily focused in North America, has more than 170 exploration, development, and royalty properties containing a well-diversified portfolio of commodities.

Globex shares currently trade at $0.375.

Golden Valley Mines, based in Quebec, has direct and indirect exposure to 72 exploration properties.

It has a number of partner-funded JV projects and a portfolio of shareholdings.

Golden Valley shares currently trade at $0.38.

Mundoro Capital Inc., based in Vancouver, is focused on copper and gold, and has built a mineral project pipeline in Serbia and Bulgaria, in a historic mining area known as the Tethyan Belt, as well as an investment in a producing gold mine in Bulgaria.

It holds eight licenses in Serbia, three are optioned, and four are available for JV.

In Bulgaria, Mundoro has two additional licenses available for JV.

Mundro shares currently trade at $0.115.

Riverside Resources Inc., based in Vancouver, is focused on gold, silver and copper, with over eight projects in north-west Mexico and two recently added gold projects in northern Ontario.

Riverside has a database of over 75,000 mineral locations and its in-house technical team collectively has over 100 years of exploration experience and they participated in more than five mineral discoveries that have become mines.

Riverside shares currently trade at $0.155.

For a copy of the report, please visit www.eresearch.com, contact Chris Thompson by email at chris@eresearch.com and be sure to sign up for the free weekly newsletter.

I’m Fiona Forbes for Investmentpitch Media