Industry Thoughts:

Mining Finance Trends

“The market is retail-investor focused and favours companies that release great drill hole results but not necessarily those drilling the correct orebody. There are many great drill holes in deposits that are not economically viable. To access capital, companies must understand their geology, metallurgy and value proposition, and communicate it to investors. We help companies put together their investment proposal for a mine, and help them access capital. Dundee Corp. also invests in these companies themselves – so we are not in it for the fee, but for the investment.”

Jonathan Goodman, President and CEO, Dundee Corporation

“Graduation from Venture to TSX adds credibility and companies become eligible for index inclusion – however it is not a panacea or guarantee of liquidity or premium valuations The reality is that a company's fundamentals matter most to investors, and then selecting a listing venue should be about accessing the deepest pool of capital possible – which is why we see so many Canadian listed companies pursuing a dual list in the US.”

Braden Fletcher, President & Head of Investment Banking, Roth Canada, ULC

“The main issue for the sector is the high cost of capital. When compared to companies like Tesla, the major miners have a cost of capital that is much, much too high. Part of the reason for this is the sector’s legacy of volatility and inconsistent capital allocation decisions. Nonetheless, the sector’s cost of capital needs to decrease significantly. The market is generally undervaluing mining assets. Individual mining companies must increase in size to utilize economies of scale and produce low-cost metals efficiently. There has to be a reallocation of capital to the extractive end of the supply chain.”

Egizio Bianchini, Vice Chairman, Head of Metals & Mining Investment Banking, Stifel GMP

“It is difficult to find a time when all the metals were performing well. Such is the case now, so it is an exciting time for the mining industry and it is not a surprise some are calling it another super-cycle. The number of financings in 2021 may even exceed the peak year in the super-cycle in 2012. We are now strategically redirecting a significant portion of our efforts to Future Metals. The proposed “ New Green Deal” legislation in the US will require a tremendous amount of metals, and we are seeing that traditional base metals such as nickel and copper are now transformational metals.”

Keith Spence, CEO & Partner, Global Mining Capital

Image courtesy of Red Pine Exploration