A group of top mining industry investors believe that quality over quantity is the key to raising capital in today’s tight market.
The four directors and industry leaders shared their knowledge on the topic at the International Mining and Resources Conference in Melbourne this week, stating the industry has seen a revolution on how capital makes its way into the market.
The group comprised of EMR Capital managing director Jason Chang, Arete Capital Partners chief execuitve Campbell Olsen, Anglo Pacific Group CEO and executive director Julian Treger and Orion Resources Group portfolio manager Peter Rozenauers.
“We are seeing the emergence of private capital from the US pension money and endowment money, and this capital is looking where to go to next and mining is the big focus,” Chang said.
“Even in the past five years we are seeing more capital from those areas. Our view is that good assets typically get funded.”
Olsen said that while there was money still out there, the focus was on the quality end.
“There are a lot of companies that have low-quality assets that don’t stack up that are still being promoted, and the investment industry is waking up to that,” Olsen said.
“We concentrate on the high-end, with high-purity.”
The panel at the Rising Capital session on the opening day of Australia’s largest mining conference also explored ways mid-tiers can attract much-needed funding.
According to Treger, not all commodities can be funded, with coal being out of favour.
“You have to choose your spots,” Treger explained. “If you are going to try to raise money for gold, it is easier in the public market. In private equity, we look at the pricing outlook.
“You need to think about your commodity and where it is in the pricing cycle.”
While some commodities may be unattractive at the moment, investors are rushing to open their wallets to spend on battery minerals.
However, the demand side of the equation is unknown, according to Rozenauers.
Chang seconded that sentiment, stating copper was at the top of every investor’s wish list.
“Everyone is chasing good cooper, and we are seeing some exciting opportunities out there,” Chang said.
“There is a lot of new market money going into new frontiers including for copper, gold, potash and hard coking coal, however there are not too many large discoveries.”