Method Of Financing Minimally Capitalized Natural Resource Exploration Companies Through Risk Mitigation

Abstract

A junior exploration company must typically obtain financing for advanced stages of the natural resource recovery process, including the extraction stage. The method involves the procurement of errors and omissions insurance policy, that may name the investor as the beneficiary. If the amount of resources (e.g., minerals such as gold) discovered do not support the expected amount of return to the investor, the insurance company is expected to pay the claim to the intended beneficiary, namely the investor. If the amount of resources extracted are equal to or exceed the expected amount, then the insurance company does not pay on the policy, but the investor obtains the return on its investment based on the sale of the resources extracted. As a result, the risk to the investor is minimized and funding for the junior exploration company can be procured.

Dependencies are inferred from the claim text.