Mining exploration, besides being a high-risk, high-reward endeavour, is a very capital intensive business. It can take many millions of dollars to take an exploration project from grassroots to an operating mine.
Most exploration projects do not turn into mines, for a wide variety of reasons. However, it still takes a lot of money to find out whether or not there will be a positive outcome.
Financing mine exploration requires investors who are not overly risk averse. Banks, by definition, have a low tolerance for risk. As such they often will only fund mining projects once they reach the economic feasibility stage, after many of the obvious risks have been mitigated.
Toronto, and Canada in general, has developed a reputation as being the mining finance capital of the world. This stature depends very much on well-established, sophisticated mechanisms that have evolved over many decades to enable high-risk mineral exploration.
Government policies, tax initiatives, and stock exchanges all work in concert to maintain a functioning exploration industry. Canadians have historically tended to be conservative investors.
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