Thoughts on Bankers




I have spent a lot of time with senior bankers in the last month or so, and I have learned of their bias towards junior mining companies. Senior bankers do not like an economic model where 95-98 out of 100 company projects will not result in a mine, and the remaining 2-5 companies will not have the capital to build a mine for a good project.

At the $100 million to $1 billion level of check writing, banker types dislike the fat tail distribution of the junior sector. Many bankers finance mining companies without dropping down into the junior space.


As an industry, I think we have hurt ourselves in how we deal with bankers. For so long we have been bullish and promotional when we should be more honest and realistic about what we have.

The counterpoint junior CEOs would make is that without promotion, bankers would not write the checks. They might be right about the first check, but every time a junior CEO burns a banker, a candle goes out. That banker will never write another high-risk check for the next guy.

If juniors were portrayed to bankers as cheap, one-way option payments to gain exposure to a metal (economic alpha), I think they would take the bet more often than not. The problem is juniors are presented not as options but as equity ownership when in fact they are options.

Everything from the way juniors lease their land to their corporate structure is set up as a series of real options.


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