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Base metals explorer launches Australia's 1st retail crowdfunding in mining

Greenfields Exploration Ltd. has launched Australia’s first retail equity crowdfunding for a miner, in what experts say will tap into the "wealth generation" opportunities that younger investors typically want.

It is the first mining company in Australia to make such a move since laws were enacted in federal parliament in September 2017 to allow startups to raise up to A$5 million from crowdsourced funding in any one year.

Greenfields, which first announced its intentions in April, is planning an IPO on the ASX in early 2019. It also said May 30 that it now plans to "harness the crowd" in analyzing mining data, offering a reward for the best submissions.

The junior planned to raise up to A$5 million through a crowdsourced equity sale to fund frontier exploration in Greenland, initially targeting copper, cobalt and nickel, though the vast area of land its licences cover means that there will be opportunities to pursue a broad range of base, precious and specialty metals.

Perth-based Patrick Kedemos, managing director of corporate advisory and investment banking firm Avanguard Capital, told S&P Global Market Intelligence that Greenland was "probably the most promising mining province in the world, as it has so much of everything there — it's another Western Australia, basically."

"It's the largest island in the world if you treat Australia as a continent; it's an easy geography in that the mineralization takes place around the fjords so you have direct access to water, whereas most of the CapEx of mining projects usually goes into infrastructure to build the mine and bring the ore to port," Kedemos said.

"[Greenland] will clearly be on the cards, particularly with global warming, as the next big mining province of the world."

Chairperson Mathew Longworth, currently a non-executive director of Metalicity Ltd., said Greenfields hopes to gain the insight from many minds rather than one or two individuals, then carry out big data analysis of the competition results.

"As far as we're aware no other junior exploration company, anywhere, has built its business around harnessing the power of the crowd on a continuing basis," Longworth said.

Lindsay Dick, Greenfields director and general counsel of blockchain energy start-up Power Ledger, told S&P Global Market Intelligence that "essentially we are planning to incentivize the crowd to analyse our data for us and tell us what we have found."

"I think a lot of younger investors feel like the system hasn't really allowed them to invest in early stage companies, but the new laws should go some way to enabling this,” Dick said.

Greenfields has tapped Sydney-based Billfolda.com — which holds one of only seven licences to conduct an equity crowdfunding — to manage the raise.

Billfolda CEO Matthew Pinter, who also chairs Australia’s National Crowdfunding Association, said Billfolda did not expect its first raise to be a mining company, but "the model is actually very appropriate for a technology based explorer, such as Greenfields".

Greenfields is aiming at a younger demographic which it sees as ideal partners in its future.

MinEx Consulting Strategist John Sykes, who took a small stake in Greenfields, said the traditional retail and high-net-worth individuals who invest in minerals exploration are typically older and are perhaps entering the "wealth preservation" stage of their investment life-cycle, rather than looking for "wealth generation" opportunities that younger investors typically desire.

"As we have seen from the cryptocurrency and 'pot.com' booms recently, both of which have been driven by younger investors (and younger company executives) there is significant interest in high value potential investments from this cohort," Sykes told S&P Global Market Intelligence.

"One of the main barriers of entry though is the large scale of investment usually required for investing in minerals exploration companies pre-IPO. Younger investors often have good incomes, but do not yet have 'wealth' to invest so they make smaller investments. Through traditional brokers and markets such small investments are chewed up by fees.

"The opportunity to invest a few thousand dollars at low cost, simply, in an exciting early-stage exploration play is great for these investors ... and let’s face it, these are investors who are at home online, not in brokers' offices and with paperwork."