In 2016 I read several articles about how the junior mining industry must innovate to stay relevant. Innovation and changing with the times are what is needed in this economic climate.
One company that was trying something new is Abitibi Royalties. They were promoting a new way for them to acquire royalty interests in early stage properties. They were offering to fund the claim fees on behalf of the property owner in return for a royalty.
Their corporate website states that they would pay, for a specified period of time, the claim fees/taxes related to existing mineral properties or related to the staking of new mineral properties.
In return, Abitibi Royalties would be granted a net smelter royalty (“NSR”) on the property. It may be a gamble, but it’s not a high stakes gamble given the relatively low investment needed.
Not just anywhere
Some possible projects have been killed by NSR royalties. Nevada Copper (6% total) comes to mind. I guess if the prospector is about to lose the property and this is the only cash source available then you have to do what you have to do. A 2% NSR is usually worth quite a bit more than a few thousand dollars, so it seems to me that Abitibi are receiving a heck of a lot for very little up front. This may be the mining equivalent of a payday loan company.
Abitibi claims to provide the cash within 48 hrs? I wonder how they manage their due diligence in that short time frame?
My guess the due diligence is a quick two step process: (1) email me a map where your claims are located to confirm they are near an existing mine, and (2) email me the legal documents that you own the property in good standing. That might be the extent of it for all I know.