PROJECT GENERATOR MODEL

Traditional junior resource companies constantly raise capital through equity offerings, in order to fund expensive drill programs, as they try to make a discovery.

 

Rather than financing exploration through repeated share offerings that dilute investors, project generators bring in a partner that earns an interest in the property by funding advanced exploration and drilling.

Project Generator vs. Traditional Junior

This diagram highlights the difference between a project generator, like Transition Metals, and a traditional junior resource company:
 

The Dilution Risk:

Traditional junior resource companies constantly have to raise capital through equity offerings, in order to fund expensive drill programs, as they try to make a discovery.

 

Rather than financing exploration through repeated share offerings that dilute investors, project generators bring in a partner that earns an interest in the property by funding advanced exploration and drilling.

How it works

 

Here's how Transition Metals applies the project generator model:

 

Step 1 - Property Acquisition

Transition acquires a property that it believes has significant potential for discovery, either through staking, or through negotiations with prospectors or landowners. The cost of property acquisition is very low, relative to overall exploration costs.

 

Step 2 – Exploration

Transition then advances the project, typically through the application of traditional and advanced exploration techniques including data compilation, geological mapping, geochemical sampling, trenching and geophysics.

 

Step 3 – Partnership

Once it has demonstrated the potential of the property, Transition negotiates a joint venture agreement with a partner that can earn an interest in the project by committing exploration funding over a period of years. Agreements also include making cash payments to Transition, and often provide Transition with a net smelter royalty and shares in the partner company. These provide Transition shareholders with an on-going opportunity to benefit from the success of the partner, and for future growth and share value appreciation.

 

Step 4 – Advanced Exploration

Transition typically, but not always, acts as the project operator, and executes the exploration program, which often includes drilling, while the partner provides the funding, and on-going technical input.

 

VIDEO – Investigating the Project Generator Model