Mining Companies Need To Create Value For Shareholders - Mines and Money
(Kitco News)- Althoughthere are expectations that investment capital will flow back into the miningsector, companies have to do more to show value, according to some financeexecutives.
At a paneldiscussion during the Mine and Money conference in Toronto, Caroline Donally,managing director of private equity firm Denham Capital, said that in the past,companies have done poor job at creating value for shareholders.
She addedthat major producers need to show that they are able to make money to bringsome confidence back to the marketplace.
“Once thatside of the market gets its act together, there will be more appetite forrisk,” she said. “Until we can show that the mining sector can make money, itwill be difficult to attract investors.”
While thepanel acknowledged the difficulty faced by mining companies looking forinvestment capital, there was still a sense of general optimism on the stage.
Greg Honig,director of origination at Resource Capital Funds, another private equity firm,said that he is confident that investors will come back to the sector ascommodity prices eventually rise.
“There aresome supply and demand stories in the marketplace right now that will driveprices and deal flows,” he said.
MirandaWerstiuk, senior vice-president at IBK Capital, a boutique investment bankingfirm said that there is a growing disparity between the general market and themining sector and it’s only a matter of time before investors move into naturalresources as a diversification tool.
SheldonVanderkooy, general counsel at Triple Flag Mining Finance, a relatively newstreaming and royalty company in the precious metals space, said that they haveonly been in the financing game for a few years now, but since then the companyhas allocated $700 million in capital.
“And we arestill looking for more opportunities,” he said in the discussion.
He addedthat now is an excellent time for investors to get their hands on good assetsat great value.
Despitesome optimism in the marketplace, the panel warned that investment capital willcontinue to be selective. Most participants noted that management is criticalfor a company when it comes to finding much-needed finance.
“Managementteams that can provide an edge, teams that understand the environment willcontinue to attract capital,” said Werstiuk. “Ultimately a company needs a goodasset with good management in a good jurisdiction.”
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. |