Is The Mining Sector Embracing Crowdfunding?

By Neils Christensen of Kitco News

Thursday September 22, 2016 11:56

(Kitco News) - The mining community needs to see a proven track record that crowdsourcing can become another venue for companies to raise much-needed capital, according to one sector-leading executive.

Chad Williams, president and chief executive officer of Red Cloud Klondike Strike Inc. – the company behind the world’s first regulated equity crowdfunding platform exclusively developed for the mining sector – presented his platform at the Denver Gold Forum Tuesday, and speaking to Kitco News, said that the reception has so far been lukewarm.

“I sensed that given the demographics at the conference that this was like Expedia giving a presentation to travel agents,” he said. “There is some hesitancy to embrace this technology but I think people will come around once the model has been proven.”

The main message Williams said that he is trying to get out to the mining community is that his online crowdfunding program isn’t meant to compete with the sector’s traditional broker-deal funding methods. He added that they created the platform to open up the investment pool and attract new capital to the mining industry, adding that it could be a valuable add-on to their traditional businesses rather than competition.

In his presentation at the Denver conference, Williams noted that a changing demographic is increasing demand for more online products. He noted that millennials are now the largest portion of the population but stats shows that this group is less invested in stocks compared to other age groups. At the same time, millennials are more likely to participate in online financing.

“We are trying to change people’s investment habits and that is never going to be an easy task,” he said.

Looking back on Red Cloud’s achievement with the Klondike Strike platform, Williams said that they are where they expected to be. The platform was launched following the Prospectors and Developers Association of Canada conference in March, and so far, the capital raised amounts to about 10% of the company’s total business on any given offering, and that is only accessing the Canadian marketplace.

“Klondike Strike has without a doubt been a great addition and complimentary to our traditional broker-deal business,” he said. “We are able to show that crowdfunding doesn’t have to compete with traditional financing.”

Williams said that they are still growing the platform and the next step will be to launch a U.S. version sometime by the end of the year or by early 2017.  He said that it is important to build on the momentum that they have been able to generate so far this year.

Radisson Mining Resources, one of the first companies to list a private placement deal on Klondike Strike, was able to raise almost $700,000 dollars in less than three months, just slightly below their goal of $1 million.