[VIDEO] How-To: Gain Equity in the Mining Industry
Locating equity financing in the mining industry is no easy task. Companies usually generate little to no revenue which means exploration activities are typically financed by investors.
“Mining exploration companies typically raise capital by issuing new shares by way of Private Placements,” the video states. “Private placements allow mining companies to raise additional capital and can potentially provide investors with more upside and higher returns than investing in the same company in the public market.”
According to the video, there are three types of securities generally sold in a provide placement. These include: common shares, flow through shares, and warrants.
Common shares: These are the basic units of company equity. These shareholders have a vote in the election of the Board of Directors and carry the profit/loss risk.
Flow through shares: This offers the shareholder the same ownership rights as a common share, but also offers tax deductions to the investor holding them. Resource companies can “flow through” the mining exploration tax breaks they receive to these investors.
Warrants: Gives the shareholder the right, but not the obligation, to buy a common share at a certain price until a specified expiry date. Warrants have lower risk and provide additional returns if the share value increases.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.