Shifting Strategies: How Mining Companies Are Accelerating the Path to Production

• Junior mining companies are pivoting to phased development approaches, prioritizing smaller initial operations over large-scale projects to address capital constraints
• Strategic investors are increasingly important, but require CEOs to "wear out the shoe leather" networking to find the right capital partners
• Companies are right-sizing projects based on what they can reasonably finance, with some developers calculating that $500-600M is the maximum viable capex
• "Scale for scale's sake" is being rejected in favor of projects that can actually be financed and built
• Both copper and gold developers face similar fundamental challenges around capital and talent, though gold currently benefits from a stronger price environment

The Changing Landscape of Junior Mining

Junior mining companies are confronting a harsh reality: the traditional model of developing massive resource projects and hoping for a major to acquire them is no longer viable in today's capital-constrained environment. The industry is witnessing a fundamental shift toward more modest, phased approaches that emphasize near-term cash flow and capital efficiency over headline-grabbing resource numbers.

This transformation is exemplified by two companies adapting to these challenging conditions: Marimaca Copper, developing the Marimaca Oxide project in northern Chile, and Revival Gold, advancing gold projects in Idaho. Both companies have evolved their strategies to match the realities of today's mining investment landscape.

Panel with Hayden Locke, President & CEO of Marimaca Copper, and Hugh Agro, President & CEO of Revival Gold

Strategic Decisions in Mining Development

When Hayden Locke took the helm at Marimaca Copper five years ago, the company had what he described as "a very nice asset, but relatively small." The initial priority was exploration to expand the resource to an economically viable scale - not for bragging rights, but to attract the right caliber of investors.

"Scale for scale's sake doesn't help in the mining industry in my view," Locke emphasized. "But there is a point where having a bit of scale is very beneficial in a large industrial scale project."

This represents a subtle but important shift in thinking. Rather than drilling endlessly to maximize theoretical project value, companies are now strategically targeting the optimal project size that balances economic returns with financing realities.

For Revival Gold, CEO Hugh Agro described a similar philosophy, noting that their approach was influenced by successful Australian mining companies that effectively "bootstrap" projects in capital-constrained markets.

"In Canada, traditionally, we've pursued these big, large drill-off projects and the hope and prayer that some major will come along and buy us," Agro explained. "But the risk with that is huge."

The Phased Approach: Rethinking Project Development

Both executives highlighted the benefits of a phased development strategy. Rather than attempting to build billion-dollar mega-projects from the outset, they're taking incremental steps toward production.

"We specifically went to Brownfield sites where we have low capital, low technical risk around restarting because we recognized that capital was constrained," said Agro, noting that Revival Gold began implementing this strategy when they founded the company in 2017.

The oil industry's approach to staged development served as a model:

"The oil industry has already figured this out. They are already taking a phased approach to development," Agro noted. "We were a little bit ahead of the curve with that. But I think the mining industry is going there."

This strategy doesn't diminish ultimate project value—rather, it enhances the likelihood of actually realizing that value. Locke observed that counterintuitively, planning for phased development with a clear production pathway often makes a company more attractive to potential acquirers.

"In my experience, people want to buy you a lot more when you're actually going with a plan A of building it and taking it into production," he said. "And you've proven a de-risked pathway to doing that."

Market Dynamics & Capital Constraints

The fundamental driver behind this strategic shift is the challenging financing environment for mining projects. Both executives acknowledged that capital for billion-dollar mining developments simply isn't readily available in today's market.

Locke highlighted the disconnect between resource size and market reality:

"In the copper space very much so. We've seen there's a huge pipeline of copper projects. And in fact, I sat in an RBC conference where it was the developer conference. And I think the average capital cost for production for those copper projects was over $2 billion."

The market's response to such enormous capital requirements has been underwhelming. "The market cap is telling you that the market doesn't believe that you can finance it," Locke stated bluntly. He argued that companies with sub-$100 million market caps proposing billion-dollar developments need to reconsider their approach.

A critical consideration is the appropriate financing size for a company's market capitalization. Locke described his thought process:

"For a $500 million company, I look at it and go, OK, so our logical financing size without diluting our shareholders to nothingness is five to $600 million."

Agro reinforced this view, noting that the current trend toward passive investing creates additional challenges for junior miners seeking capital. "We've got some 13 or 14 trillion dollars in passive money now matching the amount of actively managed money out there. You have to be bigger in market cap size to be more relevant."

Investor Sentiment & Market Perception

The market's reception to alternative development strategies has been positive, particularly when compared to traditional approaches. Companies presenting more modest, achievable plans are securing strategic investors and maintaining healthier capital structures.

Locke described a recent dual listing on the Australian Securities Exchange, motivated by structural shifts in North American markets. "We were reviewing where all the money had gone to and it went from something like 15% passive money to over 50% in the North American market."

Both executives emphasized the importance of finding the right strategic partners with Agro citing Dundee Corporation's recent strategic stake in Revival Gold and Greenstone's involvement with Marimaca.

"Aligning yourself with partners that will mean you can get there."

Finding these investors requires substantial effort:

"Competitive tension is a function of how well you go out and network and find the pockets of capital," Locke explained. "It's not easy to find and you have to work hard and wear out the shoe leather, as I describe it, to go and continually meet these people and pitch the idea and also gain credibility with them."

Company Profiles: Adapting to Market Realities

Marimaca Copper

Marimaca Copper is developing the Marimaca Oxide project in northern Chile, which CEO Hayden Locke describes as reaching "an inflection point" in its development. The company has strategically expanded its resource through targeted exploration, building it to a scale that attracts significant investors while maintaining reasonable capital requirements.

Unlike many copper projects with multi-billion-dollar development costs, Marimaca benefits from favorable infrastructure - proximity to the ocean, access to water, and low elevation - allowing for a more modest development approach. The company is working toward delivering a Definitive Feasibility Study that Locke expects will demonstrate "industry-leading capex and exceptional return on invested capital metrics."

Marimaca recently completed a dual listing on the Australian Securities Exchange to access additional capital sources, recognizing the structural shift toward passive investing in North American markets. The company has secured strategic investors like Greenstone to support its development plans.

Revival Gold

Revival Gold, led by Hugh Agro, has adopted what he terms "the Australian model of bootstrapping projects" for its two development assets in Idaho, including the Beartrack-Arnett project with 4.6 million ounces of gold. Rather than pursuing a massive single-phase development, Revival is taking a staged approach, starting with a heap leach operation that requires less initial capital.

The company recently acquired the Mercur project, which fits with its portfolio strategy of "low capital, low risk in a capital constrained environment." Agro explained, "We want to move to free cash flow faster and this project will allow us to do that."

Revival Gold has attracted Dundee Corporation as a strategic investor, providing additional financial backing for its development approach. The company has built what Agro describes as "one of the largest development portfolios in the United States" while maintaining a "realistic path forward."

Challenges in Junior Mining

Despite the strategic shifts, junior mining companies still face significant challenges. Both executives identified finding qualified personnel as a critical concern.

"The biggest concern that I have is finding the right people and putting them in the right roles," Locke stated. "It's not a big industry. It's quite a small industry... It is really hard to find and attract good people."

This talent shortage reflects broader trends in the mining sector, where fewer young people have been entering the industry in recent decades. However, both executives see positive signs of change.

"Mining is no longer a dirty word," Locke observed. "I think that will allow younger people to start studying. And in fact, we have an intern working with us now at Marimaca, a young guy coming out of university, wanting to get into the mining space."

Agro noted increasing enrollment in mining programs, citing Queen's University in Canada where the mining program now has approximately 70 students - "five times what it was just a few years ago." He highlighted the industry's appeal to young people interested in making environmental impacts and being part of the transition economy.

The executives also discussed the challenges of market volatility, particularly around geopolitical tensions like the U.S.-China tariff disputes. Locke expressed concerns about short-term implications while remaining optimistic about longer-term fundamentals.

Macro Analysis: Gold vs. Copper Trends

The current investment environment for gold and copper developers offers interesting contrasts and similarities. Gold has experienced a dramatic price surge, while copper has shown more modest gains but remarkable resilience despite economic headwinds.

Gold producers are currently enjoying substantial cash flows - "$5 to $7 billion a quarter in free cash flow on RBC's numbers," according to Agro - but the industry remains conservative in its long-term price assumptions. Major producers are still using reserve prices around "$1400, $1500 an ounce gold," Agro noted, "Half of where the price of gold is, less than half where the price of gold is today."

This suggests significant valuation upside for gold developers if higher price levels persist, though analysts remain cautious, generally using prices around "$2,200, $2,500 at most" for valuations, significantly below current spot prices.

For copper, the outlook is complicated by macroeconomic concerns but supported by structural demand changes. "I've been surprised at how well copper has held up, frankly, considering the data in the US in particular is pointing to a recession," Locke remarked.

His recent visit to China reinforced his optimism about copper's fundamentals:

"There is a new infrastructure boom that is going on there and it is very much focused on electrification... I think the structural demand has changed."

Both metals benefit from a fundamental supply shortage, with Agro noting that regardless of short-term price movements, quality projects remain "rare, very rare, and in good locations, rare still."

"There are not enough of these development projects in good locations to feed future demand."

Locke concluded that for perhaps the first time in many years, "You can own both gold and copper and probably have a valid investment thesis for both."

Investment Strategies in Mining

For investors considering junior mining investments, both executives emphasized the importance of management quality and capital stewardship over flashy resource numbers.

Locke looks for executives "who I have known and followed and has had some level of success in some shape or form," particularly those who have "learnt through the hard scrapes of running a junior mining company."

He cautioned against CEOs who spend excessively on the conference circuit, "flying around business class and staying in very nice hotels in New York, London, Hong Kong," calling this a "red flag" for responsible capital management.

At the development stage, Locke prefers leadership with skills beyond exploration:

"I like to see maybe not necessarily a strongly technical CEO, but somebody who is less focused on the exploration side and more focused on what is required to go from a development stage project into production."

Agro added the importance of examining a company's "capital structure of financial backing," advising investors to look for "knowledgeable, capable, long-term investors that are aligned with you."

A New Era for Mining Development

The mining industry is entering a new era of project development, one characterized by greater financial discipline and pragmatism. The traditional model of developing massive projects in hopes of attracting major acquirers is giving way to phased approaches that prioritize near-term cash flow and manageable capital requirements.

This transition isn't about diminished ambition - rather, it reflects a more mature understanding of market realities. As Locke succinctly put it:

"The best return for your shareholders is the one that you can actually finance and move forward."

For investors, this evolution offers opportunities to identify companies with sustainable development plans rather than merely impressive resource numbers. Companies like Marimaca Copper and Revival Gold exemplify this new approach, balancing growth ambitions with financial realism.

In a capital-constrained environment with structural challenges around talent and financing, the winners will likely be those who adapt their strategies to match market realities while maintaining the flexibility to capitalize on commodity price strength when it occurs.

As both copper and gold continue to benefit from supportive long-term fundamentals, the companies that can successfully navigate the path to production - however incrementally - will be positioned to deliver the returns that have historically made mining an attractive, if challenging, investment sector.