DEFINITION of ‘Junior Company’
A small company that is currently developing or seeking to develop a natural resource deposit or field. A junior company will first conduct a resource study and either provide the results to shareholders or to the public at large to prove there is assets available and because developing natural resources is often a capital-intensive process. If the study provides positive results, the junior company will either raise capital or attempt to be bought out by a larger company.
BREAKING DOWN ‘Junior Company’
Junior companies are most likely to be found in commodity exploration, such as oil, minerals and natural gas. To a certain extent a junior company is like a startup in that it is either looking for funding to help it grow, or is looking to for a much larger company to buy it out. The cost involved in starting a junior company is grown signficantly but so has the reward for being successful. Junior companies still remain interesting businesses for those who can afford it.