In the case of Cliffs Natural Resources Inc (NYSE:CLF), the major company will pay the first $4 million in exploration and development expenses. Only once they’ve put this money into the ground do they earn a title interest in the property.
But even at that point Riverside maintains 30% of a project — more than enough to be worth hundreds of millions if a discovery is made. And it comes at absolutely no cost to the company.
Riverside’s strategy is already producing results.
The company’s alliance with Antofagasta — focused on massive copper deposits known as porphyries, in mineral-rich British Columbia — recently identified two projects, called Flute and Lennac.
After funding all of the “idea work” that led to these projects being licensed (at a total commitment of $1.8 million), Antofagasta has now agreed to pay for an additional $5.3 million in exploration and development on the lands to earn a 65% interest. And the agreement calls for an additional payment of $3 million (in cash) to Riverside if Antofagasta wants to keep its interest in the project after the exploration dollars are spent.
That adds up to stunning $10.1 million total payment in cash and exploration work (which enhances the value of Riverside’s retained interest in the projects). That’s a ringing appraisal of the value of John-Mark’s ideas.
All told, I estimate that the commitments Riverside holds across its various alliances are worth up to $7 million to $10 million per project. And the alliances can generate multiple projects — accruing even more value to Riverside.
The total value of payments that partners have signed up for today stands at $11,980,000. And as discussed, this number is likely to grow considerably as the joint ventures advance.
I can’t stress enough — this is hard money that some of the world’s best mining companies are paying John-Mark for the privilege of owning a part interest in one of his concepts.
It’s an absolutely astounding return on ideas. And it’s an illustration of why — if you know whom to invest alongside — exploration can be one of the most profitable industries on earth.
Editor’s note: Investing in the resources sector can be a boom or bust affair. And as Dave just told you, sometimes it all comes down to the expertise of who you know.
As we said earlier, you’ll be hearing more from Dave in the coming weeks as he takes over the reins of Scarcity & Real Wealth and Junior Resource Advisor. We couldn’t be more excited to have him aboard and hope you’ll tune in to learn more about the amazing opportunities he’s finding in this corner of the market.
Dave Forest does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.
