- Essex Minerals Inc (TSXV:ESX) has announced it’s changing its business model
- Essex will now be focusing on earn-in agreements and potential joint venture projects
- The move is spearheaded by new CEO Paul Loudon
- Consequently, the single project model the company had been following has been abandoned
- Essex Minerals Inc (ESX) is down 12.5 per cent to $0.35 per share, with a market cap of $8 million
Essex Minerals Inc (TSXV:ESX) have announced its new CEO Paul Loudon is moving the company away from wholly owned projects.
Essex will now focus on projects where it can generate earn-in agreements through exploration work, cash and stock options.
The company’s recently appointed CEO Paul Loudon has been the driving force behind the move.
Paul has a long history as a mining analyst and corporate financier of mineral projects. Essex recently recapitalised itself and is looking for new projects to spread the risk around several plays.
According to Essex, the single project strategy is an “all or nothing bet” for a junior miner on one project. This high-risk strategy results in a large percentage of mineral projects never becoming mines, resulting in junior miners ultimately needing restructuring and recapitalisation.
Essex has stated the project generator model is also undesirable. That model is where a junior miner develops an in-house geological team with the ability to identify early stage projects which can be staked and prospected to identify drill targets.
This has the inherent problem of waiting years for permits and relies on a mid to senior tier miner undertaking the majority of the exploration cost and ultimately bringing the project to development.
Essex points out that the last decade major mining companies have decreased exploration funding significantly, outlaying that risk to the juniors. This has meant development lead times in this model now exceed the attention spans of investors and makes capital raising exceedingly difficult.
Essex will instead focus on capitalising on projects that have already been advanced by another junior, sinking their own geological effort into the project.
The company hopes to locate these projects in tier one locations where drill targets are already identified, giving the company a quicker road to production and a better shareholder return.
Essex Minerals Inc (ESX) is down 12.5 per cent to $0.35 per share at 3:42 pm EST.
