10:15 am hearing, page-31

It doesn't have a lot to do with the prevailing MC (although generally the MC is some kind of function of the value of the prospects). It's more to do with the prospectivity and economics of the project, the cost of work programs and how much equity the company is willing to give up to get these work programs funded.

Permits have work commitments. Usually a level of activity, some seismic and some drills within a certain number of years. If these aren't met the company can lose the permit. usually the small cap company works up a prospect, does research, reprocess old seismic, maybe fund new seismic and gets it drill ready in order to shop around for someone to farm in and pay or help pay for it.

They hold the ground but at the same time don't generally negotiate from the best position of strength as often small caps need operating cash and have work commitments bearing down on them. Eg REY farmed out 90% of their permits for $5.1m, NSE farmed out 75% of their permits for $109.5m, Buru farmed out 50% for $152.4m. Both of the last two companies have many leases and multiple work commitments. More recently REY leases ended up more like 75% for probably around $50m in farm in and work comitments.

There are also different conditions on the money. Sometimes like REY, the small cap is free-carried through exploration meaning they don't need to put any money towards anything until production. Sometimes as in NSE's case they're up for overruns, ie anything over $13m per drill, or sometimes like Buru the company still has to put up some money for each drill, ie Buru's 20% per drill.

Sometimes multiple companies come together on one drill like Valentine-1 where ARC, PCL, FAR, EGO, EMR and a couple of private companies all came together and co-funded based roughly on their equity of the drill. That tends to happen more often on bigger single drills though, less so on something like methodical unconventional exploration where there is going to be higher ongoing capex involved to get things up and running.