Stage 1: GrassrootsIllustrative example
Project Andes-21
Atacama, Chile · Porphyry
- Copper
- Surface geochemistry and mapping only
- Alteration visible in satellite imagery
- No drilling to date
- Owner provided
- Verification pending
Stage 1: Grassroots
Grassroots
- From → to
- Grassroots → Discovery hole
- Chance of a mine
- 0.1% → 3%
- Money spent so far
- ~$0.3M → ~$3M
- Typical duration
- 1–3 years
Illustrative mid-range figures for a mid-size project. See the odds curve
What it is
Grassroots is where the odds are longest and the costs are lowest. About 1 in 1,000 prospects at this stage becomes a mine. A few million dollars of mapping, sampling and surveys buys one thing: the right to drill. If the first holes hit, the odds jump about thirtyfold.
For investors. At grassroots, an investor is backing a geological idea and a team's judgement. The evidence is at the surface: maps, rock and soil samples, geophysical images. The key questions are whether the target is drillable, what a first programme costs, and whether the licence is secure enough to keep the upside if drilling succeeds.
Work done in this stage
- Geological mapping of rock types, structures and alteration
- Rock-chip and soil sampling (geochemistry) to find metal at surface
- Geophysical surveys: magnetics, gravity, induced polarisation (IP) and electromagnetics (EM)
- Satellite and drone imagery to spot alteration and structures
- Trenching across the best surface results
- A first scout drill programme to test the best target
Drilling
- Metres
- None at first, then about 2,000–5,000 m
- Holes
- 5–20 scout holes
- Spacing
- No regular pattern: each hole tests a target
- Drill type
- Often reverse circulation (RC) first, diamond core where the geology matters
Cost and where the money goes
About $3M in all
- Scout drilling and assays
- about $2M (60–70%)
- Geophysical surveys
- about $0.5M
- Geologists, mapping and sampling
- about $0.3M
- Licence fees and holding costs
- about $0.2M
What moves it to the next stage
A drill hole intersects significant mineralization: a discovery. The project moves to stage 2.
What it takes:
- A target defined well enough to drill
- Drilling permits and access to the ground
- Money for a first drill programme
Data you should expect to see
- Geological maps
- Rock and soil geochemistry results
- Geophysical survey images and interpretations
- Satellite or drone imagery
- Once drilled: first drill logs and assays
Key risks
- Surface results may not continue at depth
- Most targets are never drilled, and most drilled targets miss
- Geophysical anomalies can have no metal behind them
- Licence renewals and work commitments can lapse
Typical financing
Who funds it: Prospectors and junior explorers.
Small sums, raised mostly as equity on the strength of an idea and a team. Much grassroots work is paid for with someone else's money: a larger company funds it through an earn-in, or a prospector options the ground out and keeps a royalty.
- Share placementsMain route
From: Specialist resource investors, retail investors, management
Small raises, often a few hundred thousand to a few million dollars, priced on the target rather than results. Dilution per dollar is highest here because the risk is highest.
- Option or earn-inMain route
From: Mid-tier and major miners, larger juniors
The partner funds exploration in steps to earn a majority interest; the owner keeps a minority without spending its own money. The partner can walk away after any step.
- Royalty saleSometimes used
From: Vendors and prospect generators
Ground is sold or optioned to an explorer, and the vendor keeps a small NSR royalty, typically 0.5–2%, as its share of any discovery.
- Flow-through and tax-incentive sharesSometimes used
From: Tax-motivated investors, mainly in Canada
Shares sold at a premium because investors receive tax deductions for the exploration spending. Similar incentives exist in some other countries.
- Government grants and incentivesSometimes used
From: Governments and geological surveys
Some governments co-fund drilling or provide free survey data to encourage exploration.
Questions an investor should ask
- What evidence supports the target, and who collected it?
- What will the first drill programme test, and what does it cost?
- Is the licence in good standing, and what does it cost to hold?
What a listing looks like at this stage
Usually filled
- Screening: title and ownership
- Location and access
- Geological setting
- Early permitting
Usually not yet
- Drilling (until the first holes)
- Resources
- Engineering and reserves
Current listings at this stage
- Stage 1: GrassrootsMapping and surface sampling, up to the first drill holes.Prospectors, junior explorers
- Stage 2: Discovery drillingDrilling has intersected mineralization; no resource estimate yet.Junior explorersPlatform focus
- Stage 3: Maiden resourceFrom the first resource estimate up to a published PEA.Few natural funders (the gap)Platform focus
- Stage 4: Resource upgradeFrom the PEA to the PFS: infill drilling upgrades Inferred to Indicated.Few natural funders (the gap)Platform focus
- Stage 5: Pre-developmentFrom the PFS to the build decision: Measured drilling, the feasibility study, permits and financing.Mid-tier miners, strategic partners
- Stage 6: Development and productionFrom the build decision through construction and ramp-up to an operating mine.Majors, banks, streaming and royalty companies