The current situation in mineral exploration calls for a capital market for mineral exploration. Domestic geological exploration investment has already shifted from... 2012 Year 512 From a peak of 100 million yuan, it has declined to... 2016 of the year 247 hundred million yuan, which also includes 77 The investment in basic geological surveys and solid mineral exploration, totaling hundreds of millions of yuan, is actually for... 170 100 million yuan. In 2016 At the China International Mining Conference, my speech mentioned that domestic investment in solid mineral exploration... 2017 Annual exploration expenditures are set to continue declining. The reason is that geological exploration funds at all levels have failed to meet their expected operational targets, with low rates of capital realization and a virtually depleted pool of exploration funds. Fiscal funding is also no longer being directed toward commercial mineral exploration. Large mining companies have largely ceased high-risk preliminary and general surveys. Meanwhile, social investment—severely impacted during the previous exploration boom—has largely withdrawn from the mineral exploration sector. As a result, exploration funding has become the bottleneck for the survival of mineral exploration, and mineral exploration now urgently needs a capital market dedicated specifically to this field.

　　The development of a capital market for domestic mineral exploration has consistently been a focal point of attention within the geological exploration industry. In recent years, extensive discussions and pilot programs have been conducted; however, substantial progress has yet to be made. This is evident in the absence of a fully developed array of market participants in the capital market and the failure to establish a comprehensive set of rules governing risk-based exploration investments. The key challenge lies in the fact that mineral exploration is a high-risk investment—and IT Investment in biopharmaceuticals shares similarities with mineral exploration. At the domestic level, it’s akin to preliminary surveys and general surveys; internationally, it’s comparable to reconnaissance, grassroots exploration, mineral prospecting, and greenfield exploration. A defining characteristic of risk exploration investment is that, first, funds are directed toward areas with a high likelihood of failure—mineral exploration carries significant risks, has a low success rate, and typically requires a long time frame. Therefore, it’s essential to establish appropriate operational and return mechanisms to attract investors willing to take on such risks. Second, risk exploration involves investing in a... “ Mineral Exploration Story ” Second, direct investment toward a mineral exploration idea that can truly resonate with venture capital investors in the risk exploration sector. Third, venture capital should be directed toward geologists who possess both field experience and specialized skills—those best equipped to bring exploration concepts to life. Venture capital investments shouldn't just focus on geological potential; even more importantly, they must place emphasis on the people themselves—the individuals who will actually carry out the exploration work. Fourth, invest in small-scale exploration companies. These smaller companies have relatively low total assets and market capitalization. However, once they successfully identify valuable mineral deposits, their investments hold great growth potential—a goal that risk exploration investors are striving for.

　　The key players in the risk exploration capital market are stock exchanges and various risk exploration funds. Stock exchanges serve as the primary venue for risk exploration financing, with major hubs including Toronto, Sydney, New York, London, and Johannesburg. 5 At the stock exchange—both domestically and in Asia—there isn't yet a mature stock exchange segment dedicated to financing exploration for risky minerals. Venture capital firms and venture capital funds within mining companies are the primary sources of funding for risk exploration. In Toronto, for example... 70 Among the thousands of funds managed by several fund companies with investments in the mining sector, many are dedicated to risk exploration investments. Different funds exhibit varying preferences regarding the types of minerals targeted, the countries and regions involved, and the specific stages of exploration. In China, the Shenzhen Stock Exchange requires that companies seeking a listing on the ChiNext board must have three years of consecutive profitability. Coupled with inherent challenges within the mineral exploration industry itself, domestic exploration firms are unable to list on the Shenzhen Stock Exchange for financing purposes. Similarly, it is also difficult for these firms to secure venture capital funding on the Hong Kong Stock Exchange. During the heyday of mineral exploration, a number of risk exploration fund companies were established in China; their entrepreneurial spirit was truly commendable. However, due to a lack of experienced teams and proper operational expertise, these companies often made reckless moves, rushing headlong into investments at peak moments. When the exploration landscape rapidly reversed, they found themselves caught off guard and deeply trapped, a situation from which they have yet to fully recover.

　　The development of a domestic capital market for mineral exploration has been under exploration for many years. Cities such as Tianjin, Beijing, and Chongqing have all undertaken extensive pioneering efforts, yet the results have not yet met the original expectations. In today’s remarks, we will analyze the development of China’s domestic exploration capital market starting from its market participants and market rules. 7 One issue, and also the future direction for building the exploration capital market. 7 Key points. Today, we’re merely exploring the issues at hand. The industry has reached a consensus on these problems, laying the foundation for building and developing the exploration and mining capital market.

　　First, the authenticity of geological data is the foundation for building a capital market for mineral exploration.

　　The century-old gold exploration scam is a prime example. 1995 Year 10 Month, Bre-X The company announced that a massive [object/structure] has been discovered in Kalimantan, Indonesia. “ Busang Gold Mine ” With substantial investment in drilling, the discovered gold resources have increased by... 142 tons, quickly rising to 2013 tons, and it’s also rumored to have a long-range capability. 2 Ten ounces, that is... 6250 A staggering amount of resource reserves. Exciting! “ Good news for mineral exploration ” Reports keep coming in that the company's stock price has surged nearly a thousandfold. 1997 Year 3 Moon 27 One day, the counterfeit time bomb exploded, sending stock prices plummeting. As shown in the figure, it was like riding a roller coaster of wealth—once again. This... 68 A publicly listed company with a market capitalization of hundreds of millions of dollars vanished from the face of the earth in an instant, leaving investors who had been exploring it to suffer heavy losses. Bre-X The fraud case sent shockwaves around the globe. At the time, the Global Times—a newly established publication of the People's Daily—devoted its entire front page to reporting on this century’s exploration scandal. When the city gate catches fire, the fish in the pond get scorched as well; the entire industry was disgraced, and junior exploration companies lost their credibility. Capital markets lost trust in risk exploration, plunging the exploration investment market into a five-year slump. This case illustrates that without the authenticity of geological data, there can be no thriving exploration capital market—and exploration fraud will deal a devastating blow to the exploration capital market.

　　In recent years, there has been a growing trend of fraudulent mineral exploration and falsified geological data in China. To illustrate the severity of this issue, let’s take as an example a lengthy report from CCTV’s “Dongfang Shikong” program, which sheds light on the extent of falsification in domestic mineral exploration data. One fraudster, operating in Inner Mongolia, fabricated entirely out of thin air... 6 A detailed exploration report for an iron ore deposit. Within this process, there are entities that assist in preparing the detailed exploration report, others that conduct reviews based on their qualifications, still others that file and register resource reserves, and yet others that issue mining permits—essentially, everything proceeds smoothly without any obstacles. The report mentions that one of these mining permits was even sold. 2900 Ten thousand yuan. In this report, CCTV reporters interviewed relevant personnel. Officials from government departments claimed they bore no responsibility; geological experts asserted that neither did they; and even the appraisal agencies completely washed their hands of the matter. After investors entered the mining areas, they found they simply couldn't extract any minerals—truly leaving them at a loss for words and forced to accept their bad luck. If it turns out that the geological data were falsified yet all parties involved claim no responsibility, then it clearly indicates a failure in oversight of such fraud and a fundamental flaw in the rules governing the exploration market. Under these circumstances, who would dare to take on the task of acquiring exploration results? Investors have lost confidence in the exploration market—how can we possibly talk about building a capital market for exploration under such conditions? After watching CCTV’s report, one can’t help but reflect deeply.

　　The core of geological exploration market regulation is to strictly supervise the quality of geological reports and rigorously prevent the falsification of such reports. 2009 That year, I published a lengthy article on the front page of the China Mining News. “ Investigation fraud—a bomb that hasn't been detonated. ” The article meticulously lists instances of surveying fraud. 12 This practice has also been reported by CCTV. After the report was published, some people argued that this is merely an isolated incident and that we shouldn't generalize from a single case or smear the reputation of the entire industry. Others pointed out that everyone on Earth knows about this issue—only no one has ever dared to speak up. Due to the grave situation of falsification of geological data, insufficient awareness, leniency toward fraud, and regulatory negligence, the problem of falsified geological data has only grown worse and worse. Fraudsters are reaping enormous profits—tens of millions, even hundreds of millions—in just a few years. Even if they get caught, they’ll likely just pay a small fine and walk away with their ill-gotten gains. Yet this has dealt a severe blow to the exploration investment market. A mining exploration right—the minerals buried beneath it and its exploration potential—are invisible and intangible. The value of such an exploration right hinges entirely on the description provided in the exploration report. The value of exploration rights forms the foundation for financing in the exploration capital market. Unless we address the issue of the authenticity of geological data, the exploration industry will lose investors’ trust, making it impossible to build a robust exploration capital market. Listing mining exploration companies would then become nothing more than empty rhetoric—like trying to catch fish by climbing a tree.

　　II. Combating the falsification of geological data requires relying on the deterrent effect of legal sanctions.

　　Falsification yields huge profits, and relying solely on industry self-regulation is simply powerless. Let me share an example of a case in which a company that provided false geological data across borders was held legally accountable. The Southwestern Gold Corporation of Canada conducted gold exploration in Boka, Dongchuan, Yunnan Province. To boost the company’s stock price, its president, Patterson, introduced some falsified assay data, artificially inflating the estimated gold reserves by— 20 ton, exaggerated to 150 Ton. 2007 Year 7 Last month, it was revealed that geological data for the Boka Gold Mine had been falsified. Canadian mounted police conducted cross-border evidence collection, and Patterson was convicted. 6 A year in prison, and to use all of one’s family assets to cover the costs. 1550 C$10,000 in legal settlement costs. I’m... 2008 I’ve written an internal briefing report on this matter. Here’s the report from the Vancouver Sun. Mr. Patterson’s fate should serve as a warning to all those who falsify exploration data.

　　Domestic tolerance toward falsification in exploration has led to a rampant and uncontrollable epidemic of such fraud. The prevalence of fraudulent mineral exploration has triggered numerous economic disputes and criminal offenses. Since there are no specific legal provisions for penalizing exploration fraud, the Supreme People's Procuratorate has issued a special judicial interpretation, sentencing offenders by analogy to the crime of forging official documents. Compared with other types of economic fraud, however, the penalties imposed for exploration fraud remain disproportionately lenient. Forging official documents of companies or public institutions carries a maximum sentence of three years, whereas economic fraud crimes—such as fraud—can result in much heavier punishments. 20 For cases involving sums of 10,000 yuan, the base sentence is ten years. As mentioned earlier, they swindled money by pretending to have an iron ore deposit that doesn't exist at all. 2900 Ten thousand yuan. The “Regulations on the Administration of Geological Data” are even weaker and more ineffective—simply fabricating false reports... “ Order to make corrections within a specified time limit, and impose a fine. 10 A fine of 10,000 yuan ” Not even a strong statement was made about revoking mining rights or canceling exploration qualifications. Moreover, the geological reports themselves are riddled with numerous issues—such as poor-quality geological work and vague professional terminology—that undermine the development of the exploration capital market. We won’t delve further into these matters here. In short, unless we can effectively curb exploration fraud through legal and institutional measures, it will be impossible to build a thriving exploration capital market.

　　3. Develop rules for the disclosure of mineral information.

　　Bre-X Following the century’s gold exploration fraud case, the mining investment community has reflected deeply on its mistakes. The Canadian Securities Regulator ( CSA ), focusing on the critical issue of exploration information disclosure, and formulated... NI43-101 This regulation 1990 It was promulgated in [year], and subsequently underwent multiple revisions and improvements based on feedback from the capital market and issues arising during implementation. NI43-101 These are not exploration technical standards, but rather the rules and procedures for disclosing information on mineral exploration. They standardize the preparation of geological technical reports used for financing, striving to prevent the falsification and distortion of geological information and thereby maximizing the protection of the interests of exploration investors.

　　The information disclosure procedure complies with the rules—it’s not a technical issue. NI43-101 The document provides strict definitions and clear explanations for the terminology used in geological reports; establishes standardized requirements for the form and format of written reports, and delineates specific content that is prohibited from disclosure; imposes more stringent regulations on the disclosure of analytical data, exploration results, and resource reserves; clarifies the qualifications and responsibilities of report preparers, as well as the work requirements at exploration sites; and specifies the legal commitments that qualified professionals must make regarding geological reports. Some of these requirements are not yet included in domestic geological reports—for example, evaluations of commercial laboratories and descriptions of safety measures during sample transportation. In short, compliance with these guidelines is essential. NI43-101 Only the mineral geological technical report serves as the basis for financing in the capital market.

　　IV. The Role of Qualified Professionals in Exploring the Capital Market

　　In Canada, they are referred to as qualified persons, namely: QP ; In Australia, they are referred to as eligible persons. CP They are qualified to prepare geological technical reports, which may include exploration design, exploration progress, and resources. / Reserve estimation reports and various other types of reports. If such reports are not prepared by a qualified person but are signed and approved by a qualified person, they may still be accepted by the capital market. When issuing reports or signing documents, qualified persons must conduct on-site work or investigations. Qualified persons who prepare geological and technical reports must sign to indicate their agreement with the data provided by relevant parties and undertake legal responsibility for the authenticity and compliance of the technical reports. As long as there is cumulative... 5 Anyone with more than one year of experience in this professional field and affiliated with a professional association can become a qualified professional. Only qualified professionals, according to... NI43-101 , or JORC Geological technical reports that are prepared or signed in accordance with the requirements will be accepted by the exploration capital market.

　　National Development [ 2016 】 11 The official document has made it clear that, for the approval of mining mineral resources, there is no longer any requirement for entities with corresponding geological exploration qualifications to prepare geological reports. The reform to eliminate the requirement for institutional exploration qualifications has already been launched. Abroad, there are no market-entry requirements regarding exploration qualifications or levels for mineral exploration companies. Instead, exploration qualifications are approved and graded based on the number of professionals holding different titles and the quantity of instruments and equipment available. In reality, this approach bears no necessary correlation with a company’s ability to discover minerals or the reliability of its resource reserves. According to the qualification standards, a Class-A mineral exploration qualification entity must, at a minimum, possess: 500 Digital camera with 10-megapixel or higher resolution 6 Taiwan. What’s the point of standards like these? Three years ago, Australia... AusIMM The first batch of qualified individuals in China have been recognized, and now there are such individuals nationwide. 130 position AusIMM Recognized qualified professionals. The geological and technical reports they prepare—or reports that they have signed off on—have not yet played a broad and substantive role in overseas exploration capital markets. We still need to develop our own... “ Eligible person ” Shifting from unit-based responsibility to individual accountability—though highly challenging—is a clear and indispensable direction for reform. To build a sound exploration and mining capital market, it is imperative to establish a qualified personnel system in China, managed and registered by industry associations.

　　V. Risk exploration investments must have an appropriate corporate entity as their vehicle.

　　When it comes to exploration venture capital, it’s rare to see investments in private companies that aren’t yet listed. It’s best to invest in publicly listed exploration companies—these firms have transparent information disclosure and standardized exploration data release practices, making their information relatively authentic and reliable. Investing in publicly listed junior exploration companies provides an exit pathway: if exploration efforts are successful, you can promptly cash out; and if problems arise, you can exit in a timely manner, thereby minimizing losses. The investment vehicle itself must be well-suited to the requirements of risk-oriented exploration investments. If the investment vehicle is too large, even if mineral discoveries are successful, it will be difficult to achieve high growth in capital returns. Aurélien Resources is a small, junior exploration company listed in Toronto. Following the discovery of the Fortuna Norte gold deposit in Ecuador, its stock price has risen. 70 This once again highlights the magic of risk exploration investment. Successful mineral discovery drives up stock prices, venture capital achieves high growth in value, and exploration investments yield substantial returns—this is precisely the path that mineral exploration investors aspire to. Such a path can only be realized through small, junior exploration companies listed on the stock market.

　　Currently, domestic risk exploration investment still lacks appropriate and numerous corporate entities. Following this institutional reform, approximately... 80% Geological exploration units positioned as public-interest institutions of Category I or Category II are ineligible to serve as investment targets. Large mining companies, with their excessively large scale, even if their exploration efforts prove successful, find it difficult to see significant growth in capital value—thus failing to attract the attention of risk-capital investors in exploration. As for small domestic mineral exploration firms, they are exceedingly rare and still struggle to assume the role of the main force in mineral discovery. On the ChiNext board of the Shenzhen Stock Exchange, Zhongkuang Resources successfully went public—but the company’s core business is drilling engineering, and it was only after achieving three consecutive years of profitable performance that it was able to list. Xikai Mining, which started out as a mineral exploration firm, has now grown into a medium-sized enterprise engaged in diversified operations spanning mining, engineering contracting, and mineral exploration. In this round of reform, some provinces and regions have undergone comprehensive enterprise restructuring; however, these companies, characterized by overly complex management hierarchies, also face difficulties in becoming attractive investment targets for risk exploration capital. The development of China’s exploration capital market and the formation of a group of suitable corporate platforms still have a long way to go.

　　6. Technical standards must be aligned with the capital market and establish a common language for exploration and capital markets.

　　Only a handful of countries worldwide have government-issued exploration technology standards. While government-issued standards carry high authority, they tend to be rigid and difficult to revise in a timely manner in response to market changes and technological advancements. The government should not dictate what grade of mineral deposit qualifies as a mine, nor should it concern itself with specifying drilling grid densities or determining the level of resource reserves to be controlled. Under market economic conditions, standards for resource reserves are established by industry associations—such as the Canadian Mining and Metallurgical Association. “ Resource amount / Standards and Guidelines for Reserves ” Even the association’s standards do not specify what constitutes a “mine” or what exploration grid density corresponds to different levels of resource reserves. This grants qualified professionals ample room for maneuver, putting their technical expertise to the test—and also increasing their responsibilities. Geological and technical reports prepared according to these standards serve as the common language for communication between parties in the exploration and capital markets, safeguarding investors’ interests and reducing transaction costs.

　　Domestic geological exploration standards are not suited to the development of an exploration capital market. GB and DZ The rigidification of flexible mineral exploration practices—such as the longstanding, unchanging industrial-grade criteria for molybdenum deposits—fails to keep pace with changes in both market dynamics and technological advancements. Coupled with the conventional practice of drilling to the edge and exploring to the bottom, this approach often results in resource estimates that significantly exceed the mine’s reasonably designed production capacity, leading to the creation of “dead mines” that are difficult for the market to absorb. As a consequence, this situation makes it challenging to operate the exploration capital market and hinders the development of such a market. Notably, the reform aimed at transitioning the formulation of technical standards to intermediary bodies such as industry associations has already been initiated, and this shift will undoubtedly benefit the development of the exploration capital market.

　　7. The development of the mineral exploration investment market must involve the participation of exploration investment funds.

　　1990 In the past, dozens of Western junior exploration companies, backed by investment funds, invested in mineral exploration in China. For example: Haywood Securities firms and numerous funds are also participating in the investment. The investment is in Jinshan Mining Company, which has confirmed reserves in Urad Middle Banner, Inner Mongolia. 217 Gold mine, now known as Changshanhao Gold Mine, daily heap leaching. 30000 Ton is the flagship mine of Golden Group Company. After investing in Hillvale Metals, the Sha Gou lead-zinc-silver deposit in Luoning, Henan, was discovered and has now become the main mine of Henan Fendes Company, with daily mining and processing capacity. 2500 Ton. In mines where operations are generally facing difficulties, 2016 Last year, the mine’s profitability remained strong. Haywood The equity investment fund achieved a reasonable return.

　　Investment funds are the main entities investing in risk exploration. With Sprott Let’s take a fund company as an example to provide an introduction. This fund is equipped with... 4 The resource private equity fund invests in resource industries such as precious metals and base metals. The fund conducts long-term tracking. 2400 The home exploration company has accumulated exploration data from around the globe and updates it in a timely manner. Each fund’s investment evaluation team is composed of geologists, mining experts, legal professionals, and financial specialists. Geologists assess resource potential. / The reliability of reserves and the exploration potential—mining engineers assess the target ore deposits. CPAX and OPEX The lawyer analyzes potential legal issues related to exploration and development, while the accountant assesses the financial condition of the investment target. By making investment decisions through a team-based approach, we have significantly improved the success rate of mineral exploration investments.

　　Domestic risk exploration investment funds are facing difficulties. Analyzing the reasons, the first one is the lack of accurate judgment on trends in the exploration market. 2010 To 2012 First, the exploration market—both domestically and internationally—is booming, with high-level investments that have left investors deeply trapped. Second, there’s a lack of accumulated information about the global exploration market, resulting in a narrow perspective when selecting investment projects. Third, there’s a deficiency in the ability to track the exploration market, leading to overly random investment decisions and an increased likelihood of missing out on opportunities. Fourth, within funds themselves, there’s a shortage of integrated teams combining expertise in geology, mining, law, and finance, as well as a lack of effective communication across different professional disciplines. Today, the development of China’s mineral exploration capital market calls for a group of sustainably operated risk exploration fund companies.

　　Conclusion

　　Building a capital market for mineral exploration can be summarized as establishing... 4 Relevant market entities:

　　1 ) There is potential to list and raise funds on the Growth Enterprise Market of the Stock Exchange for risk exploration;

　　2 ) A mineral exploration fund that focuses on risk exploration investments and possesses comprehensive assessment capabilities;

　　3 There is a group of junior exploration companies with mineral exploration capabilities and small enterprises that have room for growth.

　　4 ) Has established a workforce of qualified professionals who are accountable for the quality of geological reports.

　　To build a capital market for mineral exploration, we must also establish... 4 Interrelated market rules:

　　1 Ensure that the geological reports and data used for capital market financing are reliable, authentic, and compliant.

　　2 ) Promulgate mineral information disclosure rules with clearly defined responsibilities;