Monday, 25 August 2014

Nolan Watson on Gold Streaming & Royalty Companies

Interview HERE. No mention of Brazilian mis-adventures at Colossus and Luna Gold
  • With the assets, what we are looking for is robust economics. You want to ensure that the ratio of the value of the mine to CAPEX is high so that you’re not putting up a tremendous amount of capital for a small return when you do build that mine. 
  • We are also looking for low-cost operations, so once they do build it, the question is whether the company is going to be able to produce at below the industry average all-in cost of production. 
  • The third thing that we are looking for with a mine is exploration upside. We want to find situations where the mine life can double or triple. 
  • On the company side, what we are looking for is obviously good management teams, but other things we are looking for are capital structure and balance sheets.  
  • We are very sensitive to not over-stream a mine. Our goal is to ensure that their shareholders are the primary beneficiary of the cashflow of the asset. We have run into it in the past where things have been over-streamed and mining companies started losing incentive to actually extract value from the asset.

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