Permit System and Raising Capital

Permit System
The other expanded system of land tenure is the permit system. In this method, the government controls the rights of the mineral and gives the prospector licence to explore a definite area. The permit — also called the concession, licence, or contract area, expires after a specific period of time; most of the time the prospector can renew the permit but must drop part of the area which it covers. This provision guarantees that the holder works continuously on exploration in order to know which parts of his contract area to keep at the next renewal. The exploration license may also specify minimum quantities of work that must be done, or money that must be spent, on the area to keep the mineral rights.

The claim system, due to the fact that it permits prospectors to stake open ground without needing applications or previous agreements, rewards companies and individuals that move quickly to pick up mining rights. The permit system's requirement for a formal  exploration agreement rewards large groups with the backing to perform the plans.

Both the claim system and the permit system give the holder the exclusive right to explore and develop an area. To keep that right, the holder is required to perform work; if the work is not accomplished, the ground falls open for someone else. It is also very common that holders of mining property must put forward technical reports to the government as proof that the exploration work has been accomplished. The reports are opened in to the public and become useful information for future prospectors.

Raising Capital
It is not necessary for you to be rich or work for a large mining company to find a mine. But there is one ingredient which is essential for any successful mine exploration and development program – access to sufficient funding to see the program through to completion.

Mining is a business like any other – with one exception: the assets of a mine are non-renewable. That means that during the course of production, the primary asset that gives a mine its being is consumed. Due to the fact that the assets are non-renewable and disappear with time, mining is a risky business. The risks are greatest at the beginning of the life of the enterprise, when geological information is sparse. Consequently, for the investor, this is the time when the greatest gains (and losses) can be made.

To get a better view on how it works, we will follow the financial history of a hypothetical exploration/development company called Morty Mines Ltd. commencing with the pre-discovery phase, we will follow it to the point where it matures to become a successful commercial mining operation. As Morty Mines evolves, it will look for financing in different places.