Upon execution of a Confidentiality Agreement, our team will commence a due diligence process, including an initial desktop review and evaluation of resource estimates, metallurgy, marketing and financial modeling.
Technical due diligence is generally the initial part of the investment process review. RCF recognizes that every project is unique and it is necessary to understand all aspects, including the technical opportunities and challenges. While primarily using its internal teams to conduct due diligence, RCF also engages external experts, as needed, to address specific issues in greater detail.
RCF understands that many risks are subjective in nature and difficult to capture in a financial model. The firm uses an established risk assessment process to identify risks according to their potential impact and their likelihood of occurring. RCF then considers how these risks might be turned into opportunities to enhance the value of the project.
RCF’s investment professionals conduct a comprehensive financial analysis of the project and company, typically including:
- cash flow models
- a market valuation analysis
- a security valuation
- a review of the structural and/or policy aspects of a specific commodity
RCF typically performs the cash flow analysis on an after-tax basis. This requires a thorough understanding of the specific tax regime of the country in which the project is located.
RCF’s management team creates detailed financial models for each proposed RCF investment and uses @RISKTM software to perform Stochastic Modeling, including Monte Carlo simulation. This modeling provides a better understanding of risk elements.