Strictly Boardroom recently posed a dilemma familiar to many in the exploration business. As a small exploration firm, which of two potential JV structures would you recommend when bringing in a larger partner?
The examples were fictional but based on typical deals in the industry.
To summarise the alternatives:
You (‘Small Co.,') are a ~$10 million market capitalisation exploration company with a portfolio of projects in Western Australia, primarily targeting gold, but also with nickel sulphide and Volcanic Massive Sulphide-hosted copper-zinc potential.
You have $2 million in cash, no debt, and your annual project holding costs are ~$500,000. The project you are joint venturing is good quality, if a little remote, and early-stage....