Mineral Intelligence Pty Ltd is set to become the first Australian SME to embrace equity crowdfunding (ECF or CSEF) as part of a capital raising to commercialise its global mining portal, and the first-ever to introduce the concept of crowdfunding to the mining and resource sector in Australia. The company, founded by experienced Australian mining executives Cameron McLean and Joe Treacy, has launched a A$500,000 capital raising to expand and commercialise its international digital market-place for mining and resource assets, engaging Sydney-based crowdfunding provider Equitise to raise part of the funds through its New Zealand-based platform.
Equitise has been licensed to offer crowdfunding services in New Zealand, which is at the forefront of crowdfunding in the Asia-Pacific region. In Australia, the Turnbull Government is reportedly set to announce a number of measures on crowdfunding in the coming months as part of its innovation agenda – including legislation to make crowdfunding available for SME’s in Australia.
Crowdfunding in Australia is currently prohibited by the Corporations Act, however this is expected to change as a result of the legislation currently being prepared. A recent World Bank study estimates that global crowdfunding could reach $96 billion (A$120 billion) by 2025 given the right regulatory environment. The crowdfunding sector is currently estimated to be worth around $5 billion, with the US, NZ and UK leading the way in this emerging area.
The funds currently being raised by MI, including via the Equitise crowdfunding platform, will be used to further develop and commercialise its digital market-place for mining and resource assets, with scheduled development including translation to Spanish and Mandarin. The start-up venture will be formally launched on November 5.
MI aims to bridge the gap between companies and investors seeking new opportunities and the large number of projects potentially available for sale worldwide. Its rapidly growing database already features 60 resource projects spanning five continents, and is on track to grow to more than 200 within six months. Projects range from operating mines and development-ready deposits with established resources to grass-roots exploration projects.
MI has also accumulated an extensive database of nearly 6,000 active industry participants, including company executives, senior geologists, engineers, industry professionals and stakeholders from other service providers and related industries. Regular Electronic Direct Mail (EDM) campaigns are conducted to this database for projects and investment.
Unlike other sites, there is no cost to list or publish a project on Mineral Intelligence, provided it complies with the terms and conditions specified. The site is designed as an information database only and does not offer any corporate advisory service. The cost of an annual subscription to MI, which provides full access to the database and site functionality, is $5,000 per company. The subscription fee is designed to ensure that only serious investors are connecting with project owners.
MI Managing Director Cameron McLean said the key to MI’s business model was scale, with the key objective being to establish the largest and most comprehensive register of project opportunities in the international resource space. “Our aim is to provide a vast and transparent market-place where buyers and sellers of mining and exploration assets can interact and connect to facilitate transactions. In the past, investors and companies have been forced to undertake a long and costly research effort in order to identify opportunities that meet their investment criteria. We believe that, for the equivalent cost of around A$20 a day, companies will be able to circumvent much of that process, quickly sorting through projects and honing in on those that fit their criteria or business model.”
“Consistent feedback from the mining industry indicates an ongoing competitive appetite for new investment opportunities around the globe. And as the mining industry becomes ever more tightly governed – with governments and shareholders pushing harder for a greater slice of returns – mining companies are under more pressure than ever to anticipate and capitalise on deal opportunity, and mitigate competitor activity.
“We estimate that there are more than 10,000 mining and metals companies globally. Based on initial business development activities, which have indicated a strong level of subscriber interest, our objective is to capture around 10% of this market by 2020 – or 1,000 annual subscriptions,” he said.
McLean said MI’s global asset and stakeholder database also provided the perfect framework to introduce equity crowdfunding to the resource sector, with the company already offering crowdfunding of mining assets through the Equitize NZ platform.
“Once the Federal Government introduces the necessary legislation – which is expected before the end of this year – the MI crowdfunding platform will be opened up to all investors through the Australian Equitise platform. There is a growing recognition that crowdfunding in North America could be a disruptive and transformational development for the resource sector, creating an entirely new paradigm for raising seed capital for early-stage mining and exploration assets.
“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. While undoubtedly the riskiest end of the mining investment spectrum, early-stage seed or venture capital also offers a potentially huge uplift as those assets which are successful progress, eventually into listed companies.
“By participating in crowdfunding campaigns, retail investors will be able to participate in seed capital raisings in a way never seen before, gaining exposure to this potentially huge value uplift which until now has only been enjoyed by a select few.
“We have partnered with Equitise to introduce ECF to the Australian mining industry by presenting selected crowdfunding opportunities to registered subscribers within its database. This will open up an innovative new capital-raising channel for the mining industry at a time when many conventional sources of funding have all but dried up.
“Put simply, the concept envisages raising chunks of seed capital (typically $250-500,000) via a larger pool of retail investors contributing relatively small amounts, rather than a smaller group of mining industry professionals and insiders contributing larger amounts.
“Our plan is to present a small number of crowdfunding investment opportunities each year, with each of the promoted investments to be carefully vetted and a roadmap to commercialisation thoroughly planned. Investors will be invited to register to receive alerts regarding crowd funding opportunities. Once registered, they will then receive an Information Memorandum (IM), similar to a prospectus, inviting them to participate in a mining investment.” www.mineralintelligence.com
Picture courtesy of Rox Resources.