Extract’s universe is entirely comprised of natural resources companies, with a primary focus on junior resources companies and a secondary focus on intermediate producers, as well as sub-sectors such as forestry and agribusiness, and support sectors for mining and energy.
Extract invests in the following sectors:
- Precious Metals
- Base and Bulk Metals
- Oil & Gas and Alternative Energy
- Agri-inputs and Agri-business
- Support sectors for Mining and Oil & Gas
Junior resource companies explore and develop prospective assets for raw materials. Most of these companies do not have any production or revenue, and rely on periodic capital raising to develop projects. Mine development is an intensive process that involves a significant amount of capital, time and risk. Junior resource companies need upwards of $50 to $200 million to fund and fully engineer a project over a 2 to 10 year period.
There are over 2000 public junior resource companies, of which approximately 70% of these companies’ equities are listed on the Toronto Venture Exchange (TSX-V). Others are listed on the Australian Stock Exchange (ASX) and London’s Alternative Investment Market (AIM). The TSX/S&P Venture Composite Index measures the broad market performance of the TSX Venture Exchange, and Extract uses this Index as our main benchmark. The junior resource market experiences large volatility, seeing significant returns (200-300% over 2-3 years) as well as losses (60-80% in 1-2 years).
Unlike most companies that produce measurable metrics such as revenue and EBITDA, junior miners lack financial performance metrics. Instead, investors in junior resource companies must utilize in-situ value, resource estimates, drilling results, and engineering reports as comparison metrics , requiring technical knowledge to provide an edge in making investment decisions.