But that could be changing in coming months, as the growing phenomenon of crowdfunding — which seeks small amounts of money from a large number of people to fund a project or venture — may soon become a viable option for Aussie companies.
“The mining industry is really prehistoric in the way we do business,” said George Salamis, chairman of Integra Gold Corp, which launched its own crowdsourcing initiative earlier this year.
Two mining executives, Cameron McLean and Joe Treacy, are planning to introduce crowdfunding in the mining sector, launching their own website called Mineral Intelligence, which assists junior exploration companies source-seed capital. The site allows anyone to list their for-sale mining projects free of charge with intentions of connecting with subscriber companies that will pay $5000 per year to access the database.
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"The lack of equity finance continues to be the most significant business constraint for mineral exploration and mining companies," said Simon Bennison, chief executive of the Association of Mining and Exploration companies, representing many of Australia's smaller miners.
Crowdfunding is worth about $5 billion worldwide, but the practice to raise equity is currently prohibited in Australia under the nation’s Corporations Act. However, McLean is hopeful that those restrictions will ease under the Turnbull government.
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"Traditionally, this has been the domain of a select few industry insiders, geologists, mining entrepreneurs and prospectors with the knowledge and industry connections required to get in the ground floor of new mining ventures," said McLean. “With crowdfunding, if someone has got $500 and wants to get in at the ground floor of a mining asset, they can.
“Typically, it’s only been open to people who with a nod and a wink and a handshake who knew that an asset had IPO potential and could get in at 7c or 8c in the knowledge it would IPO at 20c. Crowdfunding can open up the market completely.”