Real Assets Focus: The discussion centers on launching SCP Real Assets to offer private placements in the real asset space, with emphasis on mining-related opportunities.
Mining and Precious Metals: Extensive emphasis on mining finance and precious metals, reflecting the team's heritage and pipeline focus in explorers and developers.
Company Heritage (SII): Sprott Inc (ticker SII) is highlighted for its legacy in precious metals investing and a pivot to physical bullion and uranium-related products; SCP Resource Finance emerged from a management buyout of Sprott Capital Partners.
Private Placements: Positioned as efficient capital for issuers and ground-floor access for investors, but with higher risk, less disclosure, and limited liquidity.
Warrants Mechanics: Warrants are common in mining deals, often attached to units, providing long-duration optionality for investors and future capital inflow for issuers upon exercise.
Accredited Investor Criteria: Clear thresholds (income/net worth/licensure) are explained as gatekeepers for access to these offerings.
Opportunities and Risks: Potential for outsized returns in early-stage resource deals is balanced by dilution risk, execution risk, and scarce public information.
Overall Perspective: Educational intent with a bullish orientation toward mining-driven real assets via private placements, pending FINRA approval and suited for accredited investors.
Transcript
Ladies and gentlemen, hello and welcome to Wealthian. I'm Mario Rodriguez, the channel's executive producer, and joining me today is Wealthian's own Trey Reich. Hi, Trey. Great to have you today, sir. >> Hey, Mario. Thanks for having me. >> It's always great to have you. So, as you know, Trey, today's video is a little different from our usual market interviews. We are here today to discuss pending regulatory approval by FINRA of SCP Real Assets. Once that happens for qualified accredited investors, we will we'll be able to introduce select private placement opportunities in the real asset space. But ladies and gents, before we think before we even think about talking about specific deals, we want to make sure you really understand the world this these deals live in. That's why we're recording this with Trey today to give you a clear plain English framework for the three key concepts that underpin almost everything in this space. Credit investors, private placements, and finally warrants. So Trey, let's start first with the big picture. We keep mentioning SCP resource finance and [clears throat] SCP real assets, right? But uh for viewers who may be hearing these names for the first time, can you share a bit of detail on the various firms and how we got to this point? So uh up in Toronto, the firm is called SCP Resource Finance. Um, it's a Canadian broker dealer and I think more specifically a merchant bank operating in the resource sector with particular experience and expertise in the mining and precious metal sectors. Um, now the question that I think should be on everyone's mind is well where did SCP resource finance come from? And >> that's really important, I think, to understand the heritage of the firm and why we're so excited to have them as partners. So, I'm going to spend a little time on that. >> So, SEP, Resource Finance, was actually formed in May of 2023 through a management buyout of a SPAT subsidiary called Sprat Capital Partners. So, SPAT Capital Partners, SCP resource finance. Uh, we can see where uh the SCP name originated and it was from its uh operation as a subsidiary of SPAT until this May 23 uh managementled buyout. So, I think most people are familiar with SPAT and its history. Uh it's uh make a long story short, it was formed in believe it or not back in 1981 by Eric Sprat. Uh its heyday was really around 2010 through 2017 where Eric Sprat as CEO grew the firm's uh management assets under management uh enormously and accumulated quite a track record as an investment manager in the precious metal space. some would call Sprat uh during that decade the premier precious metal investment manager in the world. Uh now along the way of building his firm, Eric Sprat uh had a management or investment ethos which was fairly unique and that was rather than buying the largest established miners uh in the uh the business. Sprat spent all of its time trying to identify and develop metal explorers and developers which had the potential to become some of the largest and highest quality miners in the space. So the ethos of Sprat has always been at the development explorer developer part of the the food chain. Um, fast forwarding to the present, SPRAT's current management has pivoted towards a physical bullion um, and uranium ETF management model. So, the investment banking, the corporate finance, research, sales teams at SPAT Capital Partners were all involved in this management buyout in May of 2023. So, what's my point? Well, there was this kernel at the center of Sprat, which was Eric Sprat's vision vision for how to define attractive investments in the space and all of it moved in this management buyout to uh SEP resource finance back in 23. So my point here is we have quite the extensive team that has been operating uh together you know for two decades sort of on average and that's really why we were attracted you know at wealthon to partner with that team in the launch of SCP real assets. super interesting and super exciting, right? We're we're partnering not just with anyone but a real premier firm in the space of real assets. So um that's the backdrop trait but right for participation in this these issu issues that you're talking about that will come through SCP for Americans in um in conjunction with SCP and uh resource finance. They sell private placements, right? Which is a pretty specialized area of investing. And uh for someone watching this who's curious, but maybe new to this world, can you share with viewers now what are the key concepts they really need to understand before they even think about participating? >> Sure. Before we get there, I want to remind all viewers that if this investment opportunity sounds of interest, what Mario and I are doing today is purely on a sort of educational and preparation level. >> That's right. >> We're not marketing or selling any securities at this point. And for those that are interested, we've established a waiting list at wealthon.com/get ready. uh where folks who think they might be interested in the deal flow that may transpire after the FINRA registration, this is an opportunity to get registered and to get a little bit ahead of the the pack in terms of exclusive educational uh content and uh getting in line for potential future access to deals that may transpire from this partnership. So, I just want to point out that waiting list is open. And if this type of uh investment seems interesting or appropriate for your goals, please go to wealthon.com/gety uh and get registered on our weight list. So with that introduction, I think there's there's really three sort of key investment concepts that we should review to get people properly uh attenuated to what it is that uh SCP real assets hopes to offer. So again, pending Ephenra registration, which we believe is in a matter of weeks. The the real issues here for people to familiarize themselves with are what it means to be an accredited investor. Uh what really is involved in a private placement and because it's such a large part of a lot of these deals, what exactly is a warrant and how does it perform and operate? So, I think those are really the three uh key concepts that it's important for folks to study up on and familiarize themselves with uh as they get ready for this new opportunity. >> Perfect. Accredited investors, private placements, and warrants. So, let's take those one at a time and keep it as clear as possible. Uh first off, accredited investors. Trey, what do we on viewers need to understand about what an accredited investor actually is and really why it matters so much in the space? On a general basis, and this is very important, accredited investor is an individual or entity whom financial regulators such as the SEC deem sufficiently financially sophisticated to invest in an unregistered higher risk security. So that's sort of the general definition of accredited investor. Um I in my sleep can give appraise of the more specific restrictions that are uh established in rule 501 of regggd. Uh lots of people may have heard of the general concept of regggd. That basically is the whole world of investing that's not in registered publicly traded securities. So the SEC is really the one that focuses on new issues and offerings to the public to make sure information etc is always available to everyone. So regggd is a whole section of the SEC guidelines which is the exceptions. Reducing this all down and I could again say this in my sleep. An accredited investor in the US is generally recognized as an individual with a million dollars in net worth outside the primary um residence. So, sort of liquid securities >> uh can't include your house >> or 200,000 in annual income in each of the past two years or 300,000 in income with your spouse or partner and a reasonable expectation to repeat that income in the current financial or fiscal tax year. So, uh, a million in net worth outside the primary residence, 200,000 in income, 300,000 for couples. And that's really boiling it all down to what matters. Now, there are, as with everything, a long list of exceptions. And believe it or not, uh because I hold some of these registrations, uh holders of series 7, 65 or 82 securities licenses which are in good standing standing theoretically make them more sophisticated than folks. So even if they don't have the million dollars or the $200,000 in income, there are certain people who are properly licensed to participate. And then the other big exemption is quote unquote knowledgeable employees at entities or trusts or family offices with net worth investable assets over 5 million. So on the individual side a million or 200,000 on the institutional or entity side say a trust fund or something like that >> five million in minimum assets. So uh these are basically the requirements uh for an accredited investor. So it sounds like accredited status is basically the gatekeeper for this world. But now let's let's let's now move to the second piece that we mentioned at the beginning and that's private placements. For viewers who are used to just buying stocks or ETFs in a brokerage account, how should they think about private placements? What are they and how do they actually fund these real asset projects? Obviously, the biggest concern of the SEC is full disclosure to the public before investing. So um there are certain uh investors who the SEC deems uh you know through their accredited status uh to be sufficiently financially sophisticated >> uh to participate in deals which have less disclosure. I think that's really the best way to sum it up. So in a private placement rather than uh issuing securities to the general public uh the issuer raises capital by selling securities to these incredited and institutional investors in sort of a behind closed doors fashion. Um these investors are pre-selected typically wealthy individuals funds or other entities and the offering is not made available to the general public. Right. >> So in essence in a private placement the offering is limited to the group of investors who the SEC quite frankly thinks can handle the risk. All right. So uh a reasonable question would be why would issuers uh choose private placements and why are investors interested in private placements. So just reducing this all to the issuers's perspective, private placements have obvious advantages over general public offerings. First, speed and efficiency. So uh the whole process of disclosure and registration is probably a small fraction of what it costs an issuer to go through a general public offering. So it's cheaper and more efficient for the issuer. uh there are much lower disclosure requirements with respect to future expectations for performance etc. uh and even past performance in certain cases. There's a flexibility in terms uh because uh given this limited or more limited information an issuer of a private placement can demand more flexible terms from the investors. And then there's this concept of a selected investor base. So if you're doing a private placement, you don't have to necessarily introduce it to the whole world. You can introduce it to groups of people who may have identified themselves in the past as looking for these opportunities or who may be more educated in these sectors etc. So you don't have to approach the whole world. you can approach a certain group of investors globally who you think are appropriate prospects for the issue. From the investors perspective, obviously the most prominent benefit is because you're ahead of the general public, you're getting in on the ground floor at a new company uh at a very low valuation theoretically if the company does well. Um and so you're sort of ahead of the pack. Um and so your return potential is obviously higher and quicker in some cases. But there are of course associated elevated risk. So uh the elevated risk we've sort of >> talked about from the issuers's perspective. If you look at them from the investor's perspect perspective, there is more limited information and there are this is I think the most important consideration of investors contemplating participating in private placements. The last uh consideration from the individual investors perspective is delution and and terms. So what I mean by that is if you in or participate in a private placement at the early stage of a company's emergence quite naturally you should expect that your ownership in that company will be diluted by future offerings both private placements and eventually even a public offering which right >> could dilute your ownership significantly. So that's the risk return um of what private placements offer. >> Gotcha. Yeah, that that makes sense. So, high potential upside, but also higher risk, less information and and less liquidity. Let's go to the third leg of the stool, which I think has a lot to do with that potential for higher upside, and that is warrants. We hear about warrants all the time in mining private placements, but they're still confusing for a lot of people, >> right? They're basically like options. So Trey, can you share with wealthy viewers what is a warrant in simple terms and how do warrants actually function in these deals? >> Sure. So [clears throat] a warrant is a derivative or a synthetic security that gives its owner the right to purchase shares in a publicly traded company but not the obligation. So it sort of functions a bit like an option. Uh but the difference is options are created by option specialists and individual investors and traded amongst each other. U say a call option to buy a share of a stock at 50. You might buy that from an office uh a market making specialist in that option. Um, on the warrant side, the warrants are issued by the company and if they're exercised, it leads to the issuance of new shares by the company itself. And the other difference between a warrant and an option is generally that time frame. So, options are traded increasingly on a very short-term basis. In fact, I think more than half of current options are one day options. They call them zero D. >> Yeah. zero days to expiration. Zero DTE. >> So, a lot of options are one day. A warrant is generally >> 2 years to as long as 5 years. So, um the advantage of an option is when you're participating in one of these deals and I'm just going to go to the average in the mining sector. So, uh, when a an exploring or developing company wants to go to the private placement market to raise $50 million, they'll take the price of their stock and they'll do the private placement in what are called units. And the units are composed of one share of the issuing company and then this warrant, which are really a big part of mining finance. It's usually half a warrant or it could be a full warrant. The most common term that I've have experienced is two years. Uh, and so the whole point of how this works is if you're investing in this new company and it's private placement, therefore these elevated risks and you're in on the ground floor, what better way to sweeten the deal than to give you an option to purchase a half a share at some future price and if the stock's trading at four, maybe it's six, you know, depending on expectations. And that gives you as the investor this option, not an obligation, but an option to purchase additional shares at some price that you agree with the company is appropriate given your expectations for the future. So, if the stock does better than that, it's a no-brainer. You exercise your warrant and you may be buying shares of a company at six, but the stock's already 10. I'm using a very positive example. There's also the possibility that your option exercise price or your warrant exercise price which is six you never reach. So that's you know obviously a lot of warrants expire worthless because if you don't exercise. Now from the issuers's point of view why this is exciting is people when let's say a company does a deal you know $50 million and they issue 10 million warrants. You know stocks 47 cents a share that type of thing. What's exciting to the issuer is when the investors exercise their warrants, it brings in fresh capital because they're buying new shares. So, >> from the issuers's perspective, it's almost like lining up a future uh corporate financing opportunity. If you do a good job and you get the stock above the exercise price in managing the company, it guarantees this future inflow of capital. So that's why they work for uh for both sides. >> Great. Great. So uh before we close because we already covered the three concepts in quite a lot of detail, let's just quickly recap them again. You know, the key the three key terms you've laid out. >> Mhm. Accredited investors are folks with sophistication. The SEC has defined arbitrarily but nevertheless defined as annual income of 200 to 300 grand, net worth of a million outside the primary residence and for institutions assets over 5 million. So that's what the SEC says is an accredited investor. So that's what we're going to say an accredited investor is. The second concept is private placements. Uh the advantages are from the investors perspective getting in on the ground floor. Um the negatives are they're significantly less liquid than public offerings. And from the issuers's perspective, uh they're much cheaper, easier, flexible, and it allows them to access investment capital a lot more efficiently. And then the third sort of concept which balances the two if we might is the concept of a warrant. >> And especially in the mining industry um a warrant is a very common uh component of a private placement usually a share and a half a warrant for a certain amount of years that gives the investor potential upside and allows the issuer that potential inflow of capital in the future. So there's parts in this for the issuer, parts in this for the investor. It's not for everybody. Uh but obviously the potential the potential for future returns can be significantly higher uh with a very successful private placement than with a public offering to the general public. Uh and again, I want to stress we're not recommending, we're not giving any investment advice at this point. We're simply alerting people to this opportunity. And if there is interest, we would encourage uh Wealthy viewers to go to wealth.com/get uh and register on the wait list. There's no obligation uh no cost. It's free. There will be uh content there available to consider or continue your education process. Uh but I don't really see any downside. So I would encourage uh everyone to do so. >> Can't agree more. Trey, thanks so much for walking us through all of this. Was super interesting and very exciting. >> Certainly. And for us investors, happy Thanksgiving and uh happy holidays to everybody. >> Happy Thanksgiving to everyone and happy holidays indeed. Thanks again, Trey. And thanks to all of you for watching. We'll see you again next time.
Accredited Investing 101: Private Placements & Warrants Explained
Summary
Transcript
Ladies and gentlemen, hello and welcome to Wealthian. I'm Mario Rodriguez, the channel's executive producer, and joining me today is Wealthian's own Trey Reich. Hi, Trey. Great to have you today, sir. >> Hey, Mario. Thanks for having me. >> It's always great to have you. So, as you know, Trey, today's video is a little different from our usual market interviews. We are here today to discuss pending regulatory approval by FINRA of SCP Real Assets. Once that happens for qualified accredited investors, we will we'll be able to introduce select private placement opportunities in the real asset space. But ladies and gents, before we think before we even think about talking about specific deals, we want to make sure you really understand the world this these deals live in. That's why we're recording this with Trey today to give you a clear plain English framework for the three key concepts that underpin almost everything in this space. Credit investors, private placements, and finally warrants. So Trey, let's start first with the big picture. We keep mentioning SCP resource finance and [clears throat] SCP real assets, right? But uh for viewers who may be hearing these names for the first time, can you share a bit of detail on the various firms and how we got to this point? So uh up in Toronto, the firm is called SCP Resource Finance. Um, it's a Canadian broker dealer and I think more specifically a merchant bank operating in the resource sector with particular experience and expertise in the mining and precious metal sectors. Um, now the question that I think should be on everyone's mind is well where did SCP resource finance come from? And >> that's really important, I think, to understand the heritage of the firm and why we're so excited to have them as partners. So, I'm going to spend a little time on that. >> So, SEP, Resource Finance, was actually formed in May of 2023 through a management buyout of a SPAT subsidiary called Sprat Capital Partners. So, SPAT Capital Partners, SCP resource finance. Uh, we can see where uh the SCP name originated and it was from its uh operation as a subsidiary of SPAT until this May 23 uh managementled buyout. So, I think most people are familiar with SPAT and its history. Uh it's uh make a long story short, it was formed in believe it or not back in 1981 by Eric Sprat. Uh its heyday was really around 2010 through 2017 where Eric Sprat as CEO grew the firm's uh management assets under management uh enormously and accumulated quite a track record as an investment manager in the precious metal space. some would call Sprat uh during that decade the premier precious metal investment manager in the world. Uh now along the way of building his firm, Eric Sprat uh had a management or investment ethos which was fairly unique and that was rather than buying the largest established miners uh in the uh the business. Sprat spent all of its time trying to identify and develop metal explorers and developers which had the potential to become some of the largest and highest quality miners in the space. So the ethos of Sprat has always been at the development explorer developer part of the the food chain. Um, fast forwarding to the present, SPRAT's current management has pivoted towards a physical bullion um, and uranium ETF management model. So, the investment banking, the corporate finance, research, sales teams at SPAT Capital Partners were all involved in this management buyout in May of 2023. So, what's my point? Well, there was this kernel at the center of Sprat, which was Eric Sprat's vision vision for how to define attractive investments in the space and all of it moved in this management buyout to uh SEP resource finance back in 23. So my point here is we have quite the extensive team that has been operating uh together you know for two decades sort of on average and that's really why we were attracted you know at wealthon to partner with that team in the launch of SCP real assets. super interesting and super exciting, right? We're we're partnering not just with anyone but a real premier firm in the space of real assets. So um that's the backdrop trait but right for participation in this these issu issues that you're talking about that will come through SCP for Americans in um in conjunction with SCP and uh resource finance. They sell private placements, right? Which is a pretty specialized area of investing. And uh for someone watching this who's curious, but maybe new to this world, can you share with viewers now what are the key concepts they really need to understand before they even think about participating? >> Sure. Before we get there, I want to remind all viewers that if this investment opportunity sounds of interest, what Mario and I are doing today is purely on a sort of educational and preparation level. >> That's right. >> We're not marketing or selling any securities at this point. And for those that are interested, we've established a waiting list at wealthon.com/get ready. uh where folks who think they might be interested in the deal flow that may transpire after the FINRA registration, this is an opportunity to get registered and to get a little bit ahead of the the pack in terms of exclusive educational uh content and uh getting in line for potential future access to deals that may transpire from this partnership. So, I just want to point out that waiting list is open. And if this type of uh investment seems interesting or appropriate for your goals, please go to wealthon.com/gety uh and get registered on our weight list. So with that introduction, I think there's there's really three sort of key investment concepts that we should review to get people properly uh attenuated to what it is that uh SCP real assets hopes to offer. So again, pending Ephenra registration, which we believe is in a matter of weeks. The the real issues here for people to familiarize themselves with are what it means to be an accredited investor. Uh what really is involved in a private placement and because it's such a large part of a lot of these deals, what exactly is a warrant and how does it perform and operate? So, I think those are really the three uh key concepts that it's important for folks to study up on and familiarize themselves with uh as they get ready for this new opportunity. >> Perfect. Accredited investors, private placements, and warrants. So, let's take those one at a time and keep it as clear as possible. Uh first off, accredited investors. Trey, what do we on viewers need to understand about what an accredited investor actually is and really why it matters so much in the space? On a general basis, and this is very important, accredited investor is an individual or entity whom financial regulators such as the SEC deem sufficiently financially sophisticated to invest in an unregistered higher risk security. So that's sort of the general definition of accredited investor. Um I in my sleep can give appraise of the more specific restrictions that are uh established in rule 501 of regggd. Uh lots of people may have heard of the general concept of regggd. That basically is the whole world of investing that's not in registered publicly traded securities. So the SEC is really the one that focuses on new issues and offerings to the public to make sure information etc is always available to everyone. So regggd is a whole section of the SEC guidelines which is the exceptions. Reducing this all down and I could again say this in my sleep. An accredited investor in the US is generally recognized as an individual with a million dollars in net worth outside the primary um residence. So, sort of liquid securities >> uh can't include your house >> or 200,000 in annual income in each of the past two years or 300,000 in income with your spouse or partner and a reasonable expectation to repeat that income in the current financial or fiscal tax year. So, uh, a million in net worth outside the primary residence, 200,000 in income, 300,000 for couples. And that's really boiling it all down to what matters. Now, there are, as with everything, a long list of exceptions. And believe it or not, uh because I hold some of these registrations, uh holders of series 7, 65 or 82 securities licenses which are in good standing standing theoretically make them more sophisticated than folks. So even if they don't have the million dollars or the $200,000 in income, there are certain people who are properly licensed to participate. And then the other big exemption is quote unquote knowledgeable employees at entities or trusts or family offices with net worth investable assets over 5 million. So on the individual side a million or 200,000 on the institutional or entity side say a trust fund or something like that >> five million in minimum assets. So uh these are basically the requirements uh for an accredited investor. So it sounds like accredited status is basically the gatekeeper for this world. But now let's let's let's now move to the second piece that we mentioned at the beginning and that's private placements. For viewers who are used to just buying stocks or ETFs in a brokerage account, how should they think about private placements? What are they and how do they actually fund these real asset projects? Obviously, the biggest concern of the SEC is full disclosure to the public before investing. So um there are certain uh investors who the SEC deems uh you know through their accredited status uh to be sufficiently financially sophisticated >> uh to participate in deals which have less disclosure. I think that's really the best way to sum it up. So in a private placement rather than uh issuing securities to the general public uh the issuer raises capital by selling securities to these incredited and institutional investors in sort of a behind closed doors fashion. Um these investors are pre-selected typically wealthy individuals funds or other entities and the offering is not made available to the general public. Right. >> So in essence in a private placement the offering is limited to the group of investors who the SEC quite frankly thinks can handle the risk. All right. So uh a reasonable question would be why would issuers uh choose private placements and why are investors interested in private placements. So just reducing this all to the issuers's perspective, private placements have obvious advantages over general public offerings. First, speed and efficiency. So uh the whole process of disclosure and registration is probably a small fraction of what it costs an issuer to go through a general public offering. So it's cheaper and more efficient for the issuer. uh there are much lower disclosure requirements with respect to future expectations for performance etc. uh and even past performance in certain cases. There's a flexibility in terms uh because uh given this limited or more limited information an issuer of a private placement can demand more flexible terms from the investors. And then there's this concept of a selected investor base. So if you're doing a private placement, you don't have to necessarily introduce it to the whole world. You can introduce it to groups of people who may have identified themselves in the past as looking for these opportunities or who may be more educated in these sectors etc. So you don't have to approach the whole world. you can approach a certain group of investors globally who you think are appropriate prospects for the issue. From the investors perspective, obviously the most prominent benefit is because you're ahead of the general public, you're getting in on the ground floor at a new company uh at a very low valuation theoretically if the company does well. Um and so you're sort of ahead of the pack. Um and so your return potential is obviously higher and quicker in some cases. But there are of course associated elevated risk. So uh the elevated risk we've sort of >> talked about from the issuers's perspective. If you look at them from the investor's perspect perspective, there is more limited information and there are this is I think the most important consideration of investors contemplating participating in private placements. The last uh consideration from the individual investors perspective is delution and and terms. So what I mean by that is if you in or participate in a private placement at the early stage of a company's emergence quite naturally you should expect that your ownership in that company will be diluted by future offerings both private placements and eventually even a public offering which right >> could dilute your ownership significantly. So that's the risk return um of what private placements offer. >> Gotcha. Yeah, that that makes sense. So, high potential upside, but also higher risk, less information and and less liquidity. Let's go to the third leg of the stool, which I think has a lot to do with that potential for higher upside, and that is warrants. We hear about warrants all the time in mining private placements, but they're still confusing for a lot of people, >> right? They're basically like options. So Trey, can you share with wealthy viewers what is a warrant in simple terms and how do warrants actually function in these deals? >> Sure. So [clears throat] a warrant is a derivative or a synthetic security that gives its owner the right to purchase shares in a publicly traded company but not the obligation. So it sort of functions a bit like an option. Uh but the difference is options are created by option specialists and individual investors and traded amongst each other. U say a call option to buy a share of a stock at 50. You might buy that from an office uh a market making specialist in that option. Um, on the warrant side, the warrants are issued by the company and if they're exercised, it leads to the issuance of new shares by the company itself. And the other difference between a warrant and an option is generally that time frame. So, options are traded increasingly on a very short-term basis. In fact, I think more than half of current options are one day options. They call them zero D. >> Yeah. zero days to expiration. Zero DTE. >> So, a lot of options are one day. A warrant is generally >> 2 years to as long as 5 years. So, um the advantage of an option is when you're participating in one of these deals and I'm just going to go to the average in the mining sector. So, uh, when a an exploring or developing company wants to go to the private placement market to raise $50 million, they'll take the price of their stock and they'll do the private placement in what are called units. And the units are composed of one share of the issuing company and then this warrant, which are really a big part of mining finance. It's usually half a warrant or it could be a full warrant. The most common term that I've have experienced is two years. Uh, and so the whole point of how this works is if you're investing in this new company and it's private placement, therefore these elevated risks and you're in on the ground floor, what better way to sweeten the deal than to give you an option to purchase a half a share at some future price and if the stock's trading at four, maybe it's six, you know, depending on expectations. And that gives you as the investor this option, not an obligation, but an option to purchase additional shares at some price that you agree with the company is appropriate given your expectations for the future. So, if the stock does better than that, it's a no-brainer. You exercise your warrant and you may be buying shares of a company at six, but the stock's already 10. I'm using a very positive example. There's also the possibility that your option exercise price or your warrant exercise price which is six you never reach. So that's you know obviously a lot of warrants expire worthless because if you don't exercise. Now from the issuers's point of view why this is exciting is people when let's say a company does a deal you know $50 million and they issue 10 million warrants. You know stocks 47 cents a share that type of thing. What's exciting to the issuer is when the investors exercise their warrants, it brings in fresh capital because they're buying new shares. So, >> from the issuers's perspective, it's almost like lining up a future uh corporate financing opportunity. If you do a good job and you get the stock above the exercise price in managing the company, it guarantees this future inflow of capital. So that's why they work for uh for both sides. >> Great. Great. So uh before we close because we already covered the three concepts in quite a lot of detail, let's just quickly recap them again. You know, the key the three key terms you've laid out. >> Mhm. Accredited investors are folks with sophistication. The SEC has defined arbitrarily but nevertheless defined as annual income of 200 to 300 grand, net worth of a million outside the primary residence and for institutions assets over 5 million. So that's what the SEC says is an accredited investor. So that's what we're going to say an accredited investor is. The second concept is private placements. Uh the advantages are from the investors perspective getting in on the ground floor. Um the negatives are they're significantly less liquid than public offerings. And from the issuers's perspective, uh they're much cheaper, easier, flexible, and it allows them to access investment capital a lot more efficiently. And then the third sort of concept which balances the two if we might is the concept of a warrant. >> And especially in the mining industry um a warrant is a very common uh component of a private placement usually a share and a half a warrant for a certain amount of years that gives the investor potential upside and allows the issuer that potential inflow of capital in the future. So there's parts in this for the issuer, parts in this for the investor. It's not for everybody. Uh but obviously the potential the potential for future returns can be significantly higher uh with a very successful private placement than with a public offering to the general public. Uh and again, I want to stress we're not recommending, we're not giving any investment advice at this point. We're simply alerting people to this opportunity. And if there is interest, we would encourage uh Wealthy viewers to go to wealth.com/get uh and register on the wait list. There's no obligation uh no cost. It's free. There will be uh content there available to consider or continue your education process. Uh but I don't really see any downside. So I would encourage uh everyone to do so. >> Can't agree more. Trey, thanks so much for walking us through all of this. Was super interesting and very exciting. >> Certainly. And for us investors, happy Thanksgiving and uh happy holidays to everybody. >> Happy Thanksgiving to everyone and happy holidays indeed. Thanks again, Trey. And thanks to all of you for watching. We'll see you again next time.