Debunking a myth HOW TO TELL THE JUNIORS FROM THE SENIORS

The following criteria define a junior mining company:

* Neither a producing company nor the recipient of significant income from production or from some other business venture.

* Exploration funding does not come largely from accumulated cash flow or from previous production or from the investment income from such funds.

* The exploration funds are not provided by a senior company that controls more than half the issued shares of the subsidiary company in question.

* The principal way of raising exploration funds is the issue of treasury shares.

* The company is not primarily an oil and gas producer; nor is it the exploration arm of a large company.

* It is not a government organization. A foreign or a government-controlled company active in Canada, if it satisfies the above criteria, is also considered a junior company (several West German limited exploration partnerships, receiving the bulk of their funding from private investors, are considered here to be junior companies).

Also, a company fulfilling the above conditions is, as a rule, small in size (hence the name “junior”).

Senior companies normally derive their income from mining or other business ventures (they need not be mining companies) rather than from the issue of treasury shares. Senior companies include all exploration organiazations operated by Canadian and foreign governments.