Brent Cook: Majors are Looking at This Type of Junior
Major miners have cut back on exploration dramatically in the last few years, but according to Brent Cook of Exploration Insights, this year they’ve started moving back into that arena once again. And more importantly, they’re starting to fund juniors.
“They’ve put $370 million into juniors this year,” he said last week at the New Orleans Investment Conference. “They’re doing a bunch more joint ventures. They are just now beginning to recognize that they don’t have the future reserves to cover what they’re producing now.”
More and more majors are also looking to boost their reserves by acquiring juniors. Cook noted that seven companies that he and partner Joe Mazumdar invested in at Exploration Insights have been purchased recently, and he expects to see more of the same in the future.
However, he believes majors will have to start looking at a different type of junior moving forward. “It’s getting tougher. The easy ones were acquired last year,” he explained. “I think what we’re going to see is [majors] starting to pick up projects that are not to the feasibility stage, are not in production.”
Instead, he thinks they’ll be on the lookout for juniors with drill results coming out — “they’ll say, ‘we recognize that this may be large, we’ll buy this company early.'”
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