A PP is basically a means for a company to raise money in a manner that is brokered or non-brokered. Non-brokered financings have the advantage of directness and without the mediation problem demanded by brokerages for brokers' warrants, which can often flood back into the marketplace once they become free trading. Getting involved in a private placement is not a difficult process. But it does require a certain degree of 'proof' to the company that you are a serious investor in the company. For instance, by researching on SEDAR, you can develop a good idea of the financial strengths of the company that you are interested in. Next, you should conjoin this information with basic due diligence in terms of the company's past expenditure record and future exploration plans. Telephone the company and ask to be contacted regarding planned financings. It costs you nothing to simply be on the company's contact list. Stay in communication with the company if you are serious about wanting to participate in any financings. Make sure the company knows you are a serious investor. This does not mean that you have to be a large investor. However, you should give the company some idea of why you are invested in the company.

Increasingly, many companies require that the potential financing subscriber be an accredited investor. This generally means an investor with a minimum one million dollars in assets. This requirement is generally not enforced, only demanded. Still, it is an onerous demand for less financially endowed investors. The reason why companies often favour accredited investors is that such investors can take down a very large lot of the financing all at once, as opposed to having to deal with dozens, if not hundreds of much smaller, individual investors. Remember that each subscription follows its own bureaucratic path and can be time consuming for the company to oversee, thus accounting for the preference of companies for fewer but richer subscribers. Big investors also tend to know other big investors, which may be a consideration to companies.

Most companies will waive the accredited investor rule (assuming they have one in place, which is not the case for all financings) if you present yourself as keenly interested in participating. There is often a concern about size of placement for any subscriber. This simply means that if a financing unit is set at 25 cents a unit, for example, do not expect to be able to subscribe for 5,000 units or less. Of course, a company may agree to 5,000 units but its preference is for a higher sum. Once you have committed to assume part of the financing, the company will email or mail you subscription forms. Emailing is the simplest method for delivery of the subscription forms which entail downloading them from your computer. Filling them out is another matter, as the language is rather technical and full of legalese, with different legal obligations for different provinces in Canada. Once filled out, you simply return the signed subscription forms to the company, accompanied with a cheque (bank draft is often required) for the amount of the intended subscription. Depending on demand, the company may cut back on the amount of units you wish, but generally this does not happen.

Next comes a waiting period. The financing needs to be closed. If the financing is successful, that is, more or less fully subscribed, then the company will impose a no more subscription rule. At that point, the returned subscription forms along with cheques are processed. A notice is made to the stock exchange which will then issue acceptance of the closing of the financing. At that point, or even just prior, a stock certificate should be issued to the subscriber. The units become free trading four months after the day of the official closing of the financing. This means the subscriber's money is tied up for at least four months plus the time it takes the financing to close. Generally, what financings mean to the subscriber is about five to six months of tied up money. There is added risk in that it is possible that the stockprice, at the time when the PP shares become free trading, will trade at below the financing unit price. In a strong resource market, for instance, it is often the case that the stock price could well be trading at a marked premium over the price of the PP units, which is the lure of participating in PP financings in the first place.

There are multiple possible advantages to an investor to subscribe in PPs. One is the tax advantage offered by flow-through financings. The other is the provision of a warrant in any units offering. This applies to both flow-through and non-flow through financings. Once units become free-trading, and especially if the share price is higher than the price paid for the units, then very often the investor can sell off the share portion of the units for profit, retaining only the warrants which may or may not be exercised prior to their expiration.