Specialist mining investors have found a "buyer's market" for projects as the mining sector struggles to compete for funding with new industries, multiple industry executives said at a conference this week.
Smaller mines and developers who previously found capital through retail investors in public markets are increasingly turning to specialist investors such as private equity or companies that seek returns in mining royalties, the executives said.
Mines need to replenish their supplies and expand while developers are desperate for funding to better quantify what they have found underground.
"In terms of the capital markets, particularly for exploration, if it's not blockchain, crypto-currency or marijuana, then it doesn't get a run," said Owen Hegarty, executive chairman of EMR Capital, a private equity fund that specialises in the mining sector.
Julian Treger, chief executive of Anglo Pacific Group which invests in mining companies to secure access to royalties, said generalist investors' shift into new trends such as crypto investing and medical marijuana has given more specialized investors leeway to pick projects.
"We have seen 300 projects this year and we have done two. It's a buyers' market," he said.
Mines need to replenish their supplies and expand while developers are desperate for funding to better quantify what they have found underground
Anglo Pacific will have $150 million in unused debt facilities and cash on hand by the end of 2019 for further investments, said Treger.
Global private equity fund Denham Capital, which has just closed a $560 million mining fund, could invest in three times the number of projects its funds would allow, said Managing Director Bert Koth.
"I know from my own fund raising that the pool of available capital in the mining industry has shrunk by about 70 percent...