Exploring for New Mining Investments

By Peter Nicholson, Partner, Resource Capital Funds
October 31, 2018

For a private equity fund focused solely on minerals and mining investment opportunities, global exploration spend and where it is occurring is an important indicator of the level of activity in the sector, and the appetite for development capital.

Exploration is generally associated with minerals discovery. However, exploration features extensively in the mine development process where discoveries are proved up, derisked and progressed to a bankable stage. This includes defining Ore Resources, Ore Reserves and various levels of studies. For junior and mid-size companies, development capital ahead of a bankable project can be difficult or expensive to source from listed equity markets. This provides an opportunity for more flexible funding options such as private equity, that actively participate throughout the project development process.

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Figure 1: Global Exploration Spend
Source: S&P Global Market Intelligence, 2018

A boom-bust sector

Contributing to the project funding challenges for emerging resources companies is the highly cyclical nature of the mining industry. Lags between demand changes and production supply responses are common and usually unavoidable, contributing to significant fluctuations in global commodity prices, mining capex, and the availability and cost of development capital. This cyclicality is clearly evident in Figure 1, which shows global annual exploration spending over the last 20 years. Spending on exploration peaked in 2012 at around $20.5B after a decade of China fuelled growth during the mining boom, only briefly interrupted by the Global Financial Crisis in 2008. The subsequent cyclical decline was comparatively rapid and severe as record minerals production was brought online. Exploration spend declined by two thirds in the four years following the mining boom peak, reaching a post boom low of $6.9B in 2016. It is not until 2017 that exploration spending showed signs of recovery.

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Figure 2: Global Exploration Spending by Region
Source: S&P Global Market Intelligence, 2018

Following the money trail

While the boom-bust cycle in exploration spend has been equally prevalent across the globe, the regional distribution of exploration activity has diverged. There has been a marked change in exploration focus towards Latin America and away from more established mining regions including Australia and Canada. Latin America has generally attracted the largest share of global exploration spending throughout the cycle, accounting for an average of around 25% of spend (figure 2). The last decade has seen a clear increase in exploration focus on the region with shares of spending increasing from a low of 21.8% in 2007 to a high of 30.0% in 2017. In the same period Canada’s share has declined from around 21% to below 15%, while South East Asia, Australia and the USA have remained relatively steady at around 4%, 12%, and 8%, respectively.

The move away from grass roots Exploration can be divided into three broad types:

  • Grassroots – searching for new mineral resources.
  • Late Stage & Feasibility – evaluating discovered resources to convert to reserves, and to determine the feasibility of development.
  • Mine site – extend mine life and identify nearby targets to maintain infrastructure utilisation.

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Figure 3: Global Exploration Spending by Type
Source: S&P Global Market Intelligence, 2018

Analyzing global spending by type also indicates a change in focus over the last two decades. Figure 3 shows that in 1997 more than 50% of global spending was on grassroots exploration. As the quantum of exploration spending has grown, more of this has occurred during project development and mine site operations. In fact, project development and mine site exploration combined accounted for more than 70% of global exploration spending in 2017.

“Project development and mine site exploration combined accounted for more than 70% of global exploration spending in 2017.”

Size does matter in a cyclical sector Cyclicality in the mining sector has a direct effect on access to capital. Smaller companies generally have fewer funding alternatives available to them than their larger counterparts, and consequently have less capital to deploy in cyclical downturns. This is illustrated in figure 4, where intermediate size companies have accounted for a relatively stable share of global exploration spend across the cycle, while the relative share of spend for juniors and majors has exhibited considerable volatility. Expansionary periods in the mining cycle have provided easier access to capital for juniors, which in turn has driven significant increases in exploration spend relative to majors. As capital availability tightens in contractionary periods, exploration by juniors all but ceases, with the dominant exploration spend related to longer term development projects, or mine site activities by majors.

Pete 4

Figure 4: Global Exploration Spend by Entity Type
Source: S&P Global Market Intelligence, 2018′

Conclusion – the right time to explore for new mining investments

What do these observations around global exploration spend mean for investors looking to participate in minerals and mining growth? An increase in global exploration spend in 2017, after a four year decline, indicates an increase in capital expenditure on minerals projects, and therefore demand for investment capital. More importantly, the increasing focus on late stage and feasibility related exploration suggests the time is right for investors looking to participate in minerals project development, particularly in the Latin America region, and on smaller companies as the cycle improves. With offices in the USA, Australia, Canada, and now Chile, RCF is well positioned to participate as a strategic capital partner in the development of new mining projects across globe.


Jolimont Global Mining Systems – Investor in mining equipment, technology and services (METS)

Jolimont Global Mining Systems Pty Ltd, a portfolio company of Resource Capital Fund VI L.P., invests in high growth mining equipment, technology and services companies.  Jolimont Global’s Managing Partner, Charles Gillies spoke with Mining Journal.  “The things about METS in general is it’s kind of an emerging asset class, for want of a better word, and it wouldn’t traditionally have been an area of a lot of focus, mainly because people weren’t aware of it.”

Please read more by clicking here.

RCF Sponsors AICD in Support of Board Diversity

RCF proudly announced the sponsorship of Australian Institute of Company Directors (AICD) Western Australia’s 2019 Director Pipeline Program (DPP) at the 2018 DPP Wrap Reception held in Perth on 6 September 2018.  Launched in 2011 by the West Australian Division of the AICD, the DPP aims to create a pipeline of “board-ready” executive women in the WA business community, and to complement AICD’s national board diversity initiatives.

The program runs from February to September each year and provides the opportunity to extend networks with other senior executives and directors, raise their profiles through exclusive events and functions, and attend a range of workshops and professional development programs.  The 2018 participants included 44 women from a wide range of organisations, industries and backgrounds.

Barbara Gordon, RCF’s co-Legal Counsel, Australia spoke at the reception about RCF’s encouragement of diversity at the board level of WA companies.  As of 6 September 2018, 38%[1] of RCF’s ASX listed investments have women on their boards, including one in the role of Chair.  This compares favourably to 21.7%[2] of ASX All Ordinaries boards having women directors as at 30 June 2018.  Globally, 27%[3] of RCF’s investments have female directors.

“This diversity and strengthening of board skill sets is something RCF has been actively working on and we continue to be open to ideas that will help us to identify talent for our portfolio company boards.“ said Ms Gordon.


AICD released a Gender Diversity Progress Report[4] on 7 September 2018 indicating the boards of Australia’s largest companies are drawing closer to achieving 30% female representation by the end of 2018.


Caption: 2018 Director Pipeline Program Wrap Reception held in Perth on 6 September 2018

[1] Source: RCF internal data, 6 September 2018

[2] Source: AICD website, 7 September 2018

[3] Source: RCF internal data, 6 September 2018

[4] Source https://aicd.companydirectors.com.au/advocacy/board-diversity/gender-diversity-momentum-continues-asx-200-boards

Alufer Mining reaches 3-million man-hours without a Lost Time Injury

Alufer Mining reaches 3-million man-hours without a Lost Time Injury  

Alufer Mining Ltd marked a significant safety record, achieving 3-million man-hours without a Lost Time Injury (LTI) on its Bel Air bauxite project in Guinea. No LTI has occurred since construction activities commenced on site in January 2017.

Resource Capital Fund VI L.P. has been a strategic partner to Alufer since 2015, with RCF Senior Associate, James Rattenbury and RCF Senior Project Director, Allan Brownrigg proud to present an RCF Safety Recognition to Alufer and its contractors at a safety meeting.

“This was the first time we have ever seen such a creative and enthusiastic safety message put together by workers which included a live demonstration complete with a safety cheer squad,” RCF’s James Rattenbury commented. “The demonstration dealt with several safety hazards and since it was presented in a visual form it resonated and was retained by the many people from Alufer and its four contractors – with a total of about 600 people in attendance,” he added.


Caption: (from left) James Rattenbury, RCF Senior Associate, Allan Brownrigg, RCF Senior Project Director, Phillip Nell, Bel Air Mining Acting H&S Manager, Gawie van der Westhuizen, DRA Construction Manager and Enna Borman, DRA HSE Manager

The no-LTI achievement is a challenging feat in any developed country let alone at Bel Air given the diverse workforce of the project with 1,400 employees, of whom over 660 are from “Impacted Villages”, 540 are from Guinea, and 261 foreign expats. Three different languages are spoken on site, including French, English and the local Susu dialect. The safety culture put in place is commendable, and recognizing this achievement reinforces the benefits of continued emphasis on safety.

Allan Brownrigg said: “Having attained 3-million man-hours without an LTI is very impressive at any job, but when you consider that this was achieved in a remote location with people on site speaking different languages and with diverse experience in construction, it is truly an amazing accomplishment. This is something of which all the staff at Alufer should be extremely proud.”

Good housekeeping and observance of safety signing were evident throughout Alufer’s major project work sites – a 28 km haul road from the future mine pits to the port; the stockpile/export facility; and the ore load-out causeway (photo below). Alufer’s Bel Air bauxite project remains on schedule and on budget to date, with first ore expected to be shipped in August 2018.

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Caption: Ore load-out causeway

Alufer Mining Ltd’s Bel Air Project – Strengthening Long-Term Community Development

Resource Capital Fund VI L.P. is an investor in Alufer Mining Ltd, a private company nearing the completion of construction at its Bel Air bauxite project in the Republic of Guinea. This video, which was funded by the International Finance Corporation and directed by a young African film producer, highlights the strategic partnerships which have been developed between Alufer and local communities to develop skills and sustainable businesses which aim to strengthen long-term community development.

RCF sponsored Schulich International Case Competition

RCF were the proud sponsors of the Schulich International Case Competition (SICC) held in Toronto on March 3, 2018. RCF has been a long-time supporter of the case competition which focuses on mining and sustainability. This year’s case focused on how mining projects, which operate in politically unstable countries, should manage corruption and equitable wealth distribution.

RCF offers scholarships at Schulich School of Business, The University of Western Australia Business School (UWA) and Colorado School of Mines (CSM), of which each school had a team participate in SICC. The CSM and UWA teams were mentored by RCF for the competition and both teams did a fantastic job. CSM were awarded first prize and UWA awarded third prize – therefore a great achievement overall.

The quality of presentations was extremely high and the CSM team, which included RCF intern Phillip Ruban, and past RCF intern, Alex Campbell, prevailed with a comprehensive case that demonstrated a solid understanding of the key issues at hand.

SICC provides students with the opportunity to discuss real-life business challenges, bringing together a collection of innovative and pragmatic solutions. The case competition also provides RCF with an opportunity to demonstrate its ongoing interest and commitment to education, especially as it relates to the importance of sustainability in mining. As a Gold Sponsor, RCF features prominently in the marketing of the event and remains the only investment firm that supports the competition.

RCF Partner and Managing Director Canada, David Thomas, said “The competition is a recognition of the importance of supporting the next generation of mining leaders, as well as the ever-increasing need to incorporate innovative thinking into sustainability and mining. Understanding how to allocate capital to a wide range of initiatives will ensure sustainability today and well into the future”, he said.

“RCF has been supportive of this event for several years, both as a sponsor and as judges for the event, comprised of Allison Forrest, Jessie Liu-Ernsting and myself. The format this year was modified in such a way that there was only one judging round and a smaller number of teams, providing greater interaction between the teams and the 15 judges through an extended Q&A period”, David added.

“RCF is proud of the fantastic work from all of the teams. This is a unique competition which allows students from around the world to display their innovation and talent and apply their knowledge to real-life challenges occurring in the mining industry”, he concluded.

The CSM 2018 team was called ‘Ubia Madini’, meaning Mining Partnership in Swahili, and comprised Phillip Ruban (captain), Alex Campbell, Marko Visnjic and Emilio Castillo. UWA, the defending champion, were third-place finishers this year, behind a strong performance from the University of Toronto. The team from UWA comprised Bindi Shah, Scott Robertson, Rebecca Shanahan and Henry Bromfield.

Teams included representatives from schools such as UWA, CSM, University of Toronto, York University, and Simon Fraser University from Vancouver, BC.

The annual Schulich International Case Competition is organised by the MBA students at Canada’s York University and coincides with the start of the Prospectors & Developers Association of Canada held every March in Toronto.


Above Photo Caption: UWA team (from left) Henry Bromfield, Bindi Shah, Rebecca Shanahan and Scott Robertson

Cover Photo Caption: CSM team (from left) Emilio Castillo, Marko Visnjic, Alex Campbell and Phillip Ruban

RCF General Counsel, Cassie Boggs, receives prestigious Thompson G. Marsh Award

At the Denver University Law Stars Dinner on 2 November 2017, Cassie Boggs, Partner and General Counsel at Resource Capital Funds, was presented with the esteemed Thompson G. Marsh Award.

The award is given to an exceptional University of Denver Law graduate, based on a career of outstanding accomplishments and achievements. Cassie received the award after her achievements throughout her 35-year career, and she is one among its eight recipients since 1997.

The Thompson G. Marsh accolade is awarded periodically based on the merit of a deserving candidate as determined by the Sturm College of Law Alumni Council, the DU Law Stars nominating committee and the Dean of the Sturm College of Law at the University of Denver.

The award is quite an accolade, and Cassie is the first woman to receive this honor.

“I’m extremely humbled to receive this prestigious award. I’ve always been very fond of the University of Denver, both as a result of receiving my undergraduate and my law degree here”, Cassie Boggs said. “If I look back at my career, there are so many people that I’ve had the great privilege to work with in a variety of different countries; and my career has been defined by taking on board the many great opportunities presented to me. I would like to thank the University of Denver, Sturm College of Law for the recognition, and I am also extremely humbled to be the first woman to receive this accolade”.

The following link shows a video of Cassie following the 2017 Thompson G. Marsh Award  https://vimeo.com/241577580


Caption: The 2017 DU Law Stars (from left) were Adam Agron, John Sadwith, Cassie Boggs, Kira Suyeishi and Nancy Ehrenreich

Interview with RCF Partner and General Counsel, Cassie Boggs

Cassie Boggs is the General Counsel at RCF. Cassie joined in January 2011 and is responsible for all legal matters involving RCF and all of its funds.

I joined RCF, succeeding its first General Counsel, Brian Dolan, to manage all the legal matters related to the management company and all of our funds. I am the head of the legal department which comprises eight people: five in Denver and three in Perth. In Denver, we have a Staff Counsel, the Chief Compliance Officer, a Compliance Analyst, an Executive Assistant for the whole group, and myself. In Perth, we have two senior lawyers who act as Legal Counsel, Australia, in addition to a EA/legal assistant.

As RCF is a Registered Investment Advisor, it is governed by US securities laws. Therefore, RCF needs a compliance function, and this is a function that continues to grow.

The Staff Counsel, Matt Thompson, and I predominately work with the deal teams out of North & South America, while investment work for deals generated out of our Australian office is the responsibility of the Australian Legal Counsel. As lawyers, we are involved in all of RCF’s investment deals, including assisting with legal and country due diligence, documenting the deals, and negotiations when required.

We have worked on a number of large deals, and a big part of my job has both a legal and business component to it.  In addition, the legal group assists the finance, tax, HR and the COO on a variety of matters affecting the management company.

Cassie has a specific focus on country due diligence, political risk and corruption risks. She works hand in hand with the investment teams in these areas.

In addition to assisting the investment teams with legal due diligence, I also assess and assist in managing political and corruption risks, in part because of my background.  I lived and practised law in a variety of jurisdictions, including Kazakhstan, Pakistan, Indonesia, London and Tanzania, so I have had practical experience in those and surrounding countries in identifying and assessing the types of risks that have the potential to impact our funds’ investments and RCF’s reputation.

Cassie was previously an international partner at the law firm of Baker & McKenzie, where she worked in the firm’s San Francisco, Almaty, Kazakhstan, and Chicago offices. She travelled extensively for work as her professional career has had a specific focus on the global natural resources sector.

Over the last 35 years, I have had the opportunity to work on a lot of natural resources related transactions all over the world, which has been a great job for a girl from Aurora, Colorado who thought her law practice was going to be focused only on the American West. I am a fifth-generation Coloradoan, and since Colorado has a long history of mining, it was very natural for me to start working within the natural resources space with a particular interest in mining. I was a partner at Sherman & Howard in Denver where I began my career before moving to Baker McKenzie, an international law firm with offices all over the world. The company asked me to assist with the opening of its office in Almaty, Kazakhstan in 1994, since much of the anticipated work would be for mining and oil and gas clients. From Kazakhstan, I then worked in Indonesia. Both Indonesia and Kazakhstan were big mining jurisdictions.

During my time at the firm, I learned a lot about different legal systems outside of North America, where the majority of business is done by the relationships people have as there is often no independent judicial system that people trust and the words in a contract are not necessarily always upheld. Therefore, my experience taught me a great lesson in understanding how people do business around the world.

After Baker & McKenzie, in 2005 Cassie joined Barrick Gold Corporation, moving from a lawyer role to a business role.

After Baker & McKenzie, I joined Barrick Gold as Vice President, Corporate Development, where I moved from a legal role to a business role. I was brought into their Corporate Development group to facilitate transactions, but my work expanded to assisting in the management of acquisitions and certain of the company’s assets.

When I was at Barrick Gold, we took over Placer Dome, and that’s when the firm became the largest gold company in the world. This was a huge transaction and a fascinating one.

I was also involved in negotiating agreements with the Government of Pakistan, and at one point, I was the CEO of our Pakistan Joint Venture, trying to develop a mining project, so I spent a year in Pakistan, living in Islamabad.

Back then, Barrick Gold was winding up its African assets to list them into a separate company. So for a period of time, I was the regional head of the African business unit, and from there I helped put together the listing of what became African Barrick Gold, now Acacia Mining. After that, I was its first General Counsel before I moved to Toronto, and then subsequently back to Denver.

Cassie joined RCF after having spent many years abroad, and the firm has grown significantly since she first joined.

My encounter with RCF was through Brian Dolan who was the previous General Counsel, and who introduced me to James McClements.

I was attracted to the firm as I saw private equity as a very interesting sphere. Private equity has transformed the resources sector by offering a new opportunity to raise capital in a different way than offered by banks.

RCF has more than doubled in size since I joined the firm. When I started, there were approximately 20 people in the Denver office and less than 50 people worldwide, while now there are over 50 in North America and more than 90 globally. Since I came on board, we have added an office in Santiago, and an office opened just before I joined in Toronto. So, in a relatively short space of time, RCF went from having three offices to five.

After many years abroad, Cassie was keen to get back to Denver.

Working at RCF was a chance for me to also come back to Denver after almost 20 years, which is where I am originally from.

I am a skier and an outdoor person, I love Denver’s weather, it has four seasons. The city is the right size, and it’s where I grew up. I’ve lived in a lot of great places, so when I thought of the place where I wanted to settle, Denver was home.

Cassie has an undergraduate degree (Economics) and a law degree from the University of Denver and a Masters degree in Resource Development from Michigan State University. Cassie is also a recipient of the prestigious Thompson G. Marsh Award from the University of Denver.

In the United States, you have to gain a four-year university degree before going into law. Afterwards, it’s three years of law school. My undergraduate degree was in Economics.

In November of last year, I was awarded the Thompson G.Marsh Award from the University of Denver. This was a great honor as it recognizes a law school graduate for their accomplishments. I am proud to be the first woman to receive this recognition.

Women in leadership positions

When I started practising law, 50% of the people I went to law school with were women. Not all of those people become partners in law firms, and there is a much smaller percentage of women who become partners in law firms. Certainly, in the mining and natural resources industry, you don’t come across as many women as you would in other fields. By the same token, when I practised in Indonesia most of the law firms were run by Indonesian women. While even Pakistan, which doesn’t have a society where women are at the forefront, appointed a woman Prime Minister earlier than many other countries in the world did. You don’t see as many women in the mining field, but personally, this has created a lot of opportunities for me.