Amalgamated Mines. PE or List?
Hi all, we have an interesting project to be set a Mineral Fund. This will be responsible for Financing mineral projects across the entire Mineral cycle; prospecting, intermediate and actual mining. We will be doing; industrial minerals, stones, diamond and coal. There are three approaches;
Take a Private Equity approach to raise the funds; go out, do a due diligence and identify projects and engage institutional investors as LPs.
List a SPAC (Special Purpose Acquisition Company) to raise the funds and find the projects later. Open to retail and institutional investors.
List the mines; i.e go out, do a due diligence and identify projects and list them under the Umbrella; "Amalgamated Mines".
Which approach will serve best? Form the investors risk perspective and our risk perspective. For example I think an institutional investor may find it better to buy into a project of amalgamated Mines than to buy into a single mining project due to the diversification that comes with the amalgamation.
The mining space is very project dependent so you would need to likely have projects in advance, and then list the vehicle. A bunch of grassland with a single drill hole isn't going to get investors all hot and bothered though. If you have a track record and big name the PE fund would probably make the most sense although the time horizon could be challenging if it's very early stage as you're not going to have a liquidity event for a long time. SPAC would also be tough unless you had very name brand people which seems to be the strategy.
Good luck to you. The minerals you listed don't have very large pools of capital so raising money is going to be an uphill battle. Your best bet is likely to try and find something and prove it up to a PEA type stage and then float it. That's going to require tens of millions of dollars though if you're starting from nothing.
I was thinking the best approach is not to do either PE/SPAC but to list say 5 projects in an IPO "Amalgamated Mines" and open to retail investors and institutions to raise $50m. We can be open for as long as 9-12 months until we raise all the required money.
Yeah, I think that would make sense.
What do mean by saying the minerals don't have very large pools of capital? I'm in Africa by the way in country that is the biggest diamond producer in the world; Botswana!
Agreed, but the diamond market is very concentrated with only a few players. Also, if you're talking about Africa your potential investor universe is already halved as many PM's don't want to touch African developers.
On top of that, most funds only invest in one diamond name at most so it would be tough for you to get PM's to rotate out of say Lucara into your vehicle. Diamond pricing is too opaque and many on the buyside aren't comfortable with the sector for that reason; somewhat similar to some of the other minerals you listed. It's certainly possible but it will not be easy. You'll need a special project to attract significant investment.
Quia aut voluptatem eum eius est magnam recusandae. Corrupti ducimus temporibus id possimus sint. Qui consectetur aut accusamus. Suscipit blanditiis quo aut rerum tempore ut.
Aut quo iste et ipsum totam rerum libero. Eum quo natus natus qui adipisci qui eum. Dicta sed nisi ullam laborum ad nostrum rerum.
Repellendus explicabo voluptatem qui voluptas. Soluta eius sequi voluptatem ullam. Atque voluptas eveniet voluptas est labore ea mollitia aliquid.
Sunt fuga sequi omnis natus sint totam omnis. Nisi velit magnam similique expedita eum eos quis. Provident quae modi dolorem voluptatum itaque fugit ad. Ex nesciunt error hic aut a soluta suscipit. Reprehenderit consectetur voluptatem provident officia magni doloremque. Odit distinctio perspiciatis sit molestiae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...