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Junior Miners, Prospectors Get Thrown A Life Line

(Kitco News) - The junior mining industry has been cash starved for years, and with capital outflow into the sector lower this year than in previous years, a Quebec-based royalty company introduced an innovative way to help the beleaguered sector.

Last week, Abitibi Royalties Inc. (TSXV: RZZ) announced “The Royalty Search”, a service where the company would pay claim fees, or taxes, for existing mineral properties or staking new mineral claims for a period of time in exchange for a net smelter royalty (NSR) on the property.

The company has specific criteria they are looking for from applicants, but the submission process is where innovation ramps up; interested mining companies, or prospectors, are invited to fill out property information on the Abitibi Royalties company website, and a response is expected to be filed within 48 hours.

Canadian Malartic Mine, Quebec, Canada

Speaking with Kitco News Tuesday morning, Ian Ball, president of Abitibi Royalties, said that a week after the new tool’s launch, the company is seeing a positive reaction.

“So far the response has been good,” he said. “Out of the 19 or 20 that have been submitted, three meet what we’re looking for.

“I do think that this market, although dire for most companies right now, is the only market right now where something like this will actually work.”

While Ball noted that the website will help junior miners, he also said that prospectors could benefit from it even more.

“I look at the website, and it’s certainly geared towards junior mining companies that are strapped for cash, but it is also going back to roots, if you think of mining finance,” Ball said. “That is grub staking, a prospector who has a good idea, has a property that’s available but he doesn’t have any money.

“It’s an excellent opportunity for someone to get financing quickly, because really, these prospectors have nothing else to lose,” he added. "It's a very unique niche because royalty companies have never supplied financing on grassroots junior explorers. Grassroots and very early stage exploration has been cut off to the royalty market – they couldn’t access royalty financing.”

Ball said that the speed in which Abitibi Royalties is able to provide an answer on the submission query – two days – helps maneuver through bureaucratic delays.

The company is looking to weight 80% of its claim queries to North America, with the remaining 20% allotted to Central and South America. Ball maintained that the company is focused mostly on gold claim queries.

Asked whether he thought this idea would jumpstart a very quiet metals exploration sector, Ball said it’s far too early to tell.  

“I think what we’ve done is just a very simple step that will evolve as we go - I see it as a very minor step towards what the industry should be looking for,” he said. “We do hope to make some impact in the market through this, but it would take a much bigger event for real dollars to come back into the market.”

Abitibi owns NSR’s on Agnico Eagle Mines Ltd. and Yamana Gold Inc.’s Canadian Malartic mine, Canada’s largest gold mine, located in Quebec. They include a 2% NSR on portions of the Gouldie and Charlie zones, a 3% NSR on the Jeffrey zone and Barnat extension and a 3% NSR on the Odyssey North zone and Norrie deposit.

By Alex Létourneau of Kitco News
Follow Alex Letourneau @alex_letourneau



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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