How mining funds are facing copper falls ?
While the world junior minings have seen as the aversion to the risk has reduced the task of raising capital, in Chile the situation is somewhat different. The mineral fall dragged mineral exploration costs, opening up opportunities
The dreaded slowdown in emerging economies has had as one of its main purposes the lowest quote of commodities. Something that mining is not without let alone Chile’s top copper producer in the world. A threat to the funds that have been committed to this sector? Not at all. On the one hand making it likely that different factors raise capital today is more difficult than a few months, but many others also make the stage for exploration projects, including Chile, is somewhat favorable. There are basically two the realities faced by funds invested in mining. On the one hand, and from a global perspective, the junior minings have suffered the loss of 37% since its peak in the last four years and the 12% drop that accumulates copper in 2013. Today it is more difficult to raise capital in markets such as Canadian, Australian or Peru.
According to figures from consultancy RMG In-land, the first quarter of this year have raised $ 470 million for exploration projects, as compared to U.S. $ 1,510 million in the previous quarter and U.S. $ 1,260 million in the first three months of 2012. This was also evidenced by the number of prospects for exploration projects. Between January and March this year were 1,457 in the world, while in the same period of 2012 were 2,467, surpassing the 1,959 prospects from the first quarter of 2011. This scenario has also resulted in a strong reduction in exploration expenditure. They had had a significant upward trend, reaching a peak of U.S. $ 21 billion in 2012. However, with the present scenario for metals, the Center for Copper and Mining and expected to fall between 30% and 40%. Chile accounted for $ 1.035 billion all that was spent on exploration last year.
The scenario in Chile
Despite the context by crossing mining funds in the world, in Chile the scenario would be something different. In the country are leading the Fénix funds such projects, thanks to support from CORFO. The six managing companies who have raised capital under this figure see that although the price of copper today is in excess of U.S. $ 4, exploration costs have come down considerably.
On one side, the options to get belongings-lands where the mineral lies-become cheaper as well as supplier contracts. Rafael Donoso, CEO of investment fund mineral exploration of Asset Chile, explains that it is indeed a good time to find opportunities. “There are more facilities available at more competitive prices. On the counterpart, for an owner of a mineral property, the effect of which is not so ‘hot’ market, there is less access to financing”, which opens opportunities for this fund due to Asset Chile is able to sustain projects via financing. Donoso manages an investment vehicle close to U.S. $ 25 million. While acknowledging that “today raise a second fund, probably would be more challenging,” says a factor that favors the industry is that in Chile “There is some belief that the financial industry or the business community should be involved in mining.”
Ignacio del Rio, Active Mining general manager, administrator Company linked to Larrain Vial, note that if the price of copper has not significantly impacted, as they work with projections of $ 2.8 a pound. On the contrary, the executive argues that drilling accounts for 70% of expenditure on exploration and “the cost per meter of probing today should be near the middle of last year.”
This managing company started in 2008 with an initial fund of U.S. $ 15 mills,. whose first active (iron) has had a net return of 300% per year. Since then he has raised two other exploration funds, amounting to U.S. $ 80 mills., and the Fénix (U.S. $ 20.3 mills.) that manages looks to explore the existence of non-traditional minerals like rare earths. At Claro y Asociados (CyA), a company that participates in AC Drilling, say that in previous years 70% of exploration made by big minings, only 18% of junior and 6% medium. José Mujica, a partner at CyA and Director at AC Perforaciones, says that in 2013 sees a different situation:” the set of juniors who started the year with financing in hand, included in this group Fénix Funds that have been very active, explain 30% of exploration services. “
They play for suppliers
Outside the world of the Fénix is Nevesco. Administrator who created the Promin fund, which raised about U.S. $ 16 mills.
What could be as contrary to the cycle, the fund is focused on finding suppliers of mining, which have benefited from full employment thanks to the high prices of the mineral, although today the demand is less. However, “given the characteristics we are looking for provider, the impact (the price of copper) is less because we are looking for suppliers Class 1, those working in large deposits, either drilling or construction.” If an adjustment in the value of labor is made, would have a positive effect on these providers, because precisely the scarcity of these is critical.
Source: Pulso
