What Is a Private Placement? How Mining Companies Raise Capital

What is a private placement? A private placement is a sale of new shares, units or other securities by a company directly to a select group of investors, rather than to the general public through a stock exchange offering. Because it relies on legal exemptions instead of a full prospectus, a private placement is faster and cheaper than an initial public offering (IPO), but the securities bought cannot be freely resold for a period of time.

Private placements are the lifeblood of the mining industry. Junior explorers and developers use them to fund drilling, studies and mine restarts, and private companies use them to raise capital before going public. This guide explains how private placements work, who can invest, what terms to look for, and the risks, using real examples from mining, including the pre-IPO round being run by Pilar Gold, which is restarting a fully equipped gold mine in Brazil.

How does a private placement work?

In a private placement, a company negotiates the sale of new securities with a limited number of qualified investors and relies on a prospectus exemption to do so. The basic steps are:

1. The company sets terms. It decides how much to raise, the price per share and whether each unit includes a warrant.
2. Investors are approached. This can happen directly by the company (a non-brokered placement) or through an investment dealer that earns a commission (a brokered placement). Finders may receive a fee.
3. Investors subscribe. Each investor signs a subscription agreement and confirms which exemption they qualify under, for example by completing an accredited investor form.
4. The deal closes. Funds are paid, and shares are issued with a legend restricting resale. Larger rounds often close in several tranches.
5. Filings are made. In Canada the issuer files a report of exempt distribution (Form 45-106F1) with securities regulators. In the United States a Form D notice is filed with the SEC within 15 days of the first sale.

Because there is no long-form prospectus to prepare and review, a private placement can be completed in weeks rather than months, and at a fraction of the legal and underwriting cost of a public offering.

Private placement vs. IPO vs. public offering

For a private company, a private placement is often the step before a listing. Investors buy in early at a lower valuation, and the company later goes public through an IPO, a reverse takeover (RTO) or a qualifying transaction with a shell company.

Why mining companies rely on private placements

Mining companies use private placements because they need frequent, flexible funding long before they generate revenue. Exploration, resource drilling, feasibility studies and restarts all require cash, and private placements provide it quickly.

The numbers show how dominant they are. According to the TMX Group's December 2025 MiG Report:

Private placements made up roughly 87% of all equity raised by TSX Venture mining companies and about 70% across both exchanges in 2025. TMX notes that TSX and TSXV mining companies completed more than 6,400 financings over the past five years, representing 45% of all public mining financings worldwide.

Strong gold prices helped. As gold moved above US$4,000 per ounce in late 2025, investors were willing to fund more drilling and development, and private placement volumes on the TSX Venture more than doubled from 2024. Brazil-focused juniors are a good example: Cabral Gold closed a C$45 million private placement with a strategic investor in August 2026 as it began production at Cuiú Cuiú (see our list of Brazil gold mining stocks).

Who can invest in a private placement?

Most private placements are limited to accredited investors, although other exemptions exist. The rules depend on where the investor lives.

Canada: NI 45-106 exemptions

Under National Instrument 45-106, an individual is an accredited investor if they meet any one of these tests:

• Financial assets (cash and securities, net of related debt) of more than C$1,000,000, alone or with a spouse
• Net assets (all assets including real estate, minus all liabilities) of at least C$5,000,000, alone or with a spouse
• Net income before taxes of more than C$200,000 in each of the last two years, or C$300,000 combined with a spouse, with the same expected this year

The Ontario Securities Commission has warned that financial assets and net assets are often confused. Your home counts toward net assets but not toward financial assets.

Other common Canadian exemptions include the family, friends and business associates exemption, the minimum amount exemption (C$150,000 or more, for non-individuals), and the offering memorandum exemption, which lets non-accredited investors buy in some provinces with investment limits.

United States: Regulation D

US issuers usually rely on Rule 506(b) of Regulation D, which allows unlimited sales to accredited investors and up to 35 sophisticated non-accredited investors, but no general advertising. Rule 506(c) allows advertising, but every buyer must be accredited and verified.

An individual is a US accredited investor with net worth above US$1 million excluding their primary residence, or income above US$200,000 (US$300,000 jointly) in each of the last two years. Certain licensed professionals also qualify.

Canadian companies selling to US residents, and vice versa, must comply with the rules of the investor's jurisdiction as well as their own.

What is a private placement in mining? Common terms explained

Mining placements share a common vocabulary. Knowing it makes term sheets much easier to read.

• Common shares. The simplest structure: a fixed number of shares at a set price.
• Units. One share plus a warrant, or a fraction of a warrant. A typical junior mining unit might be one share and one-half warrant.
• Warrants. The right to buy another share at a fixed exercise price, usually above the placement price, for one to three years. Warrants add upside if the share price rises.
• Acceleration clauses. Let the company shorten the warrant term if the share price trades above a set level for a period, which encourages early exercise.
• Flow-through shares. A Canadian structure in which the company passes eligible exploration expenses to investors for tax deductions, so these shares usually sell at a premium.
• Discount to market. For listed companies, placements are often priced below the trading price. Stock exchange rules limit how large the discount can be.
• Strategic placements. A larger mining company or investor takes a stake, sometimes with board seats or participation rights.

For a private, pre-IPO company, there is no market price to discount from. The price is set against the company's assets and peer valuations, which is why investors compare metrics such as enterprise value per ounce of gold resource.

Hold periods: when can you sell?

Private placement shares are restricted securities, so you cannot sell them immediately.

In Canada, NI 45-102 sets the resale rules:

• Reporting issuer (for example a TSXV-listed company): a four-month-and-a-day hold period from the date the placement closes. After that, shares can generally be sold on the exchange.
• Non-reporting issuer (a private company): shares are restricted indefinitely. They become freely tradable only four months after the later of the purchase date and the date the company becomes a reporting issuer, typically through a listing.

In the US, Regulation D securities are "restricted securities" and are usually resold under Rule 144 after a holding period of six months to a year, depending on the issuer.

This is the key trade-off in pre-IPO investing: investors get in early, often at a lower valuation, but their money is locked up until a liquidity event. If the listing is delayed or never happens, there may be no way to sell.

Pre-IPO private placements: a mining example

Pre-IPO placements sit at the riskier, potentially higher-reward end of the spectrum. A current example is the round being run by Pilar Gold Inc, a Canadian company restarting the PGDM gold complex in Goiás, Brazil. You can read the background in our guide to gold mining in Brazil.

According to the company:

The structure illustrates what investors typically weigh in a pre-IPO deal: the discount to listed peers and near-term catalysts (production restart, then listing) on one side, and execution risk and illiquidity until the listing on the other. Our explainer on the Pilar Gold IPO plans covers the listing route in more detail. Current terms and timing are always on the Pilar Gold pre-IPO offer page.

How to evaluate a mining private placement

Before you subscribe, work through these questions:

1. What is the money for? Funds tied to a clear, near-term milestone (a resource update, permit, or production restart) are easier to judge than general working capital.
2. Is the price fair? Compare the implied valuation with listed peers on enterprise value per ounce, production, and cost (all-in sustaining cost, or AISC).
3. What is the asset? Look at the resource category (measured, indicated or inferred), grade, jurisdiction and whether a technical report supports the numbers.
4. Who is running it? Check management's track record of discovering, building or operating mines.
5. What is the capital structure? Count shares outstanding, warrants, options and convertible debt, and estimate dilution.
6. How will you exit? For a listed company, understand the hold period. For a private company, understand the listing plan and what happens if it slips.
7. What are the documents? Read the subscription agreement, term sheet and any offering memorandum, and ask for the investor pack.

Risks of private placements

Private placements suit only investors who can afford to lose their whole investment. The main risks are:

• Loss of capital. Early-stage mining companies can fail because of geology, costs, financing or commodity prices.
• Illiquidity. Hold periods, and for private companies the lack of any market, mean you may not be able to sell when you want.
• Less disclosure. There is no regulator-reviewed prospectus. Canadian accredited investor forms explicitly warn that you may receive little information.
• Dilution. Future financings, warrants and options can reduce your percentage ownership.
• Listing risk. For pre-IPO deals, the planned listing may be delayed, done at a lower valuation, or not happen.
• Suitability. The person selling to you may not be a registered advisor. You can check registration at aretheyregistered.ca in Canada or FINRA BrokerCheck in the US.

The bottom line

A private placement is the most common way mining companies raise money: a direct sale of new shares to qualified investors, completed quickly under a prospectus exemption. For investors, placements can offer discounted prices, warrants and early access to companies before they list, in exchange for hold periods, less disclosure and higher risk.

If you qualify and want to see how a pre-IPO gold placement is structured in practice, you can request the Pilar Gold investor pack to review the full project details and offering documents, and speak to a licensed advisor before investing.