VETTR — Financial intelligence for Canadian public markets

Junior mining companies on the TSXV represent one of the highest-risk, highest-reward corners of Canadian markets. Many are genuine exploration stories; some are sophisticated promotional vehicles. The checklist below won't save you from every bad investment, but it will catch the most common warning patterns.

Management Track Record

The single most important variable in junior mining is the team. Good operators build mines; promoters build share prices.

Check:

·Has the CEO or Chairman previously built a mine to production? Or do they move from company to company at the exploration stage?

·Do insiders own stock they bought (not just stock options)?

·Is the management team the same people who were running other companies that went to zero?

VETTR's knowledge graph links executives across companies, so you can see a promoter's full history in one view.

Property Ownership and Staking

The most common structuring issue in junior mining is the property deal between the company and a director-controlled entity.

Check:

·Who staked the property originally? Is there an arm's-length relationship to the company's principals?

·What are the option terms? Is the company paying market rate?

·Are there underlying royalties or NSR interests that reduce the economics?

Resource Estimates

NI 43-101 resource estimates vary wildly in quality. An "Inferred" resource is very different from a "Measured and Indicated" resource.

Check:

·What category is the resource? Inferred resources carry significant uncertainty.

·When was the resource estimate filed? Old estimates may not reflect current metal prices or updated drilling.

·Who is the Qualified Person? Is the QP employed by the company or genuinely independent?

Cash and Burn Rate

Most junior mining companies are pre-revenue. Their survival depends on access to capital.

Check:

·How much cash is on the balance sheet?

·What is the monthly burn rate (look at quarterly cash flow statements)?

·When does the company need to raise again? If within 12 months, model the dilution.

The Financing History

Private placements at significant discounts to market are a common transfer of value from public shareholders to insiders and connected investors.

Check:

·What is the history of private placements? Who participated?

·Were placements done at market price, or at a significant discount?

·Do warrants from old placements create an overhang that will suppress the stock price?

Red Flags in the MD&A

VETTR's filing integrity signals catch many of these automatically, but manual reading is irreplaceable.

Watch for:

·Going concern notes

·Auditor changes, especially mid-year

·Significant changes in accounting policies that inflate reserves or reduce losses

·Language like "we expect to be able to raise capital" without evidence of any committed financing

Junior mining is not for everyone. But for investors who do the work, the TSXV has produced extraordinary returns on genuine discoveries. The checklist above is the minimum, not the maximum, of what due diligence looks like.

The TSX Junior Mining Due Diligence Checklist

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