Each potential investment is first evaluated on the basis of whether it meets Company’s basic investment profile.Financial Due Diligence:
To determine operational metrics of potential investments under review, Company will focus on two primary valuation methods:
Technical Due Diligence:
- Using extrapolated resources; Company will prepare future discounted cash flow projections. Initially, these will be weak due to the early stage status of targeted advanced exploration stage projects. Over time, this methodology will become increasingly relevant as Company learns more about a specific project and reduces or eliminates certain risk elements. Once Company can establish proven reserves, confidence in cash models, subject always to commodity pricing assumptions, increases dramatically; and,
- b) Second valuation method is comparative valuations. Company can use analogies of recent marketplace transactions to value projects under review. Company will monitor transactions of publicly traded non-portfolio companies and M&A activities of its niche sectors throughout the natural resource industry.
Company due diligence processes will rely on consultative experts who have specific knowledge within a project’s setting. Typically, Company would expect to directly engage a technical team of geologists, metallurgical experts and engineers to evaluate merits of any given investment opportunity. Further, Company expects to engage legal and environmental experts to assess permissibility, legal ownership questions and environmental risks of any targeted investment. Localized expertise will be sought as required. As Company grows in size, Company expects to increase its in-house technical expertise accordingly.
Collaborative, regular weekly investment meetings are held with all team members and affiliates. All participants engage in active discussions regarding prospects, risks, position size, and alternatives of both prospective investments and existing positions. Managing Partner makes all final decisions, though team members generally reach a consensus regarding the investment decisions.
A list of selected experts that Company will potentially engage, from geologists to attorneys, is available upon request.