Global Mining Finance 2015: “Not seeing any signs of improvement”

By James Sean Dickson
Published: Saturday, 26 September 2015

Upturn in investment still distant, delegates at the Global Mining Finance 2015 heard, as the supercycle model was described as “flawed”. Crowd funding meanwhile has “moral implications”.

There is no immediate sign of an uptick in the depressed area of mining finance, delegates attending the Global Mining Finance Autumn 2015 conference in London, UK, were told in late September.

"I hope I’m not being too gloomy – but I’m not seeing any signs of improvement," George Rogers, CEO of Rockface Capital, a mining debt, equity and royalty capital specialist, said. 

"For the past four years the markets have been going down. It’s a really long and painful amount of time."

"I’ve spoken to Korean mining entrepreneurs who wish they’d never heard of the mining sector," he added.

Rogers rejected the idea of the so-called "commodities supercycle", stating that it is neither part of a cycle nor is it "super". "I struggle with the concept of a cycle. Cycles are vaguely predictable," he said.

Exploration funding is the toughest to attain, he said, adding that the door remains ajar for more developed projects. "There’s absolutely no money out there for people that want to explore. It’s probably when you’re at feasibility study (FS) stage [that funding becomes more available], but even then, only for exceptional projects in stable countries."

Financing methods

Rogers identified pension fund credit as a potential wrong avenue for both creditor and receiver. "Pension fund credit can be two-three times the price of regular bank credit. I see a lot of people making mistakes here," he said, adding that a number of funds engaging in credit lending were not experienced in the practice.

He also rejected the notion of explorers taking on any debt-based finance, which is typically based on positive FS projections. "Who doesn’t believe their FS will show it to be a wonderful and beautiful project? Nobody factors in that a lot of these projects aren’t."

"Most companies are continuing on existing shareholders. It’s important to get decent shareholders in the good times – they’ll help you out in the bad times," Rogers explained.

Rogers considered two forms of unconventional capital raising. "Sovereign wealth money is occasionally seen, but it’s hard for mining companies to get access to it," he said.

When questioned on the potential of crowdsourcing in mining, he was uneasy about the potential moral maze presented by less-well informed investors.

"I think we’re in a sector that is technically very difficult for the layperson to understand. Maybe for the person receiving the money it’s a great source, but from the moral aspect the industry needs expertise," Rogers said.