It is where "investors" pool their money and form a company in order to create a business which works in any number of different fields. When money runs out you ask the holders for more money in order to keep going in the hope of achieving what the company hopes to do.
That is a long winded way of saying it but that is what it is.
Most exploration companies would never obtain a loan, on favourable terms from a bank, unless they were already the size and strength of BHP.
The advantage for shareholders is that you can get in on the ground floor and buy a shipload of shares that you would not be able to afford once the company was successful.
The disadvantage is, of course, that you usually need to put in more capital, often several times, in order to keep the company alive.
The risk that you will do your bum is huge, but that is life - big risk - big reward, but when it comes to mining exploration it is usually HUGE risk for no reward. About 1% are successful.
I really think a lot of people are in the wrong end of the stock-market and should just stick with bank shares.
I know I should have, but here we are and I am still hopeful.
I have had some huge successes ( 6c to $6 ) & ( 50c to $13 ) but I tend to be over ambitious ( greedy ) and then put it into other stocks that turn out to be fizzers.
Lockitt
ICG Price at posting:
2.1¢ Sentiment: None Disclosure: Held
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