RM Mining & Energy Wholesale Fund
The RM Capital Difference
Fund Overview
Philosophy
The Fund’s investment philosophy is disciplined based on natural resources market specialisation allowing for an integrated investment process incorporating both top-down and bottom-up analysis to make informed investment decisions which are defensive throughout economic cycles.
Experienced team of investment professionals with in-house technical expertise and an established global sourcing network.
Expertise
The founders bring extensive technical, commercial and financial expertise having previously held senior positions within leading mining houses, private equity firms, family offices, specialist investment funds and corporate advisory firms.
Proven track record of creating value with a global network of mining & energy professionals providing an established sourcing network to expedite deal-flow and investment opportunities.
Opportunity
Opportune time to establish a portfolio of high-quality assets ahead of the next potential commodities super-cycle and leverage of the emerging supply-demand imbalances in mid-cycle commodities as global consumption habits continue to evolve.
Systemic under-investment within the industry over the past ten years will likely affect future supply security and long-term prices.
Investment Philosophy
The Fund’s investment philosophy is primarily based on the belief that micro-capitalisation mining and energy companies are often overlooked by larger institutional investors and therefore may be undervalued.
The Fund’s objective is to identify such companies through our integrated investment process incorporating both top-down and bottom-up analysis serving to identify undervalued companies with strong fundamentals.
Expertise
The Fund’s founding Investment Committee members have a proven track record of creating value, bringing extensive technical, commercial, and financial expertise having previously held senior positions within leading mining houses, private equity firms, specialist investment funds and corporate advisory firms.
This same philosophy has been carried through into the Fund allowing us to quickly form differential views on asset quality and potential returns.
Markets
Given the multiplicity of variables associated with commodity markets, the Investment Manager does not believe in the predictive ability required to accurately forecast pricing or economic cycles over the short term.
However, the Investment Manager believes that a number of commodities are favourably positioned to outperform the broader market as global consumption habits evolve and resource inventories are continually depleted. These themes will position specific markets and commodities to outperform others.
Risk
The Fund places the highest priority on minimising risk and preventing losses. Risk minimisation is principally achieved through the Fund’s integrated investment process whereby all core technical, financial, environmental, and legal aspects of an investment opportunity are concurrently assessed and a risk- protected base case is formed.
Nonetheless, the Investment Manager considers the significance of real asset exposure and the leveraged up-side for the Fund can be derived through project optimisation and resource inventory extensions, and as such the Investment Manager also seeks to quantify these upside opportunities.
Consistency
The Investment Manager believes that a consistent out-performance of its peers can only be achieved through a superior knowledge of the assets and management teams in which the Fund will invest and not through misguided attempts at forecasting market events.
Therefore, the Fund’s investment process is integrated incorporating both top-down and bottom-up analysis to make informed investment decisions.
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Investment Process
The Fund’s portfolio will be actively managed placing the highest priority on risk minimisation, loss prevention and the generation of consistent returns throughout the cycle.
This is principally achieved through our integrated investment process incorporating both top-down and bottom-up analysis to make informed investment decisions.
Top Down | Macroeconomic Analysis
Commodity Markets
Interest Rates, Inflation, GDP growth, Fiscal & Monetary Policy
Industry-specific Trends
Bottom Up | Stock Selection
Quality Management Teams
Exploration & Growth Potential, Revenue Growth, Operating Margins
Industry-specific Due Diligence
Due Diligence Process
Once we have completed both the top-down and bottom-up analysis, we integrate the findings to develop an investment thesis.
We assess how the macroeconomic factors and market trends identified in the top-down analysis can impact the specific companies identified in the bottom-up analysis. This integration allows us to determine which investment opportunities align with our overall investment strategy and risk-return objectives.
The Funds Process
1a Technical DD
The Fund’s multi-disciplinary team seek to undertake a granular and bottom-up analysis of all core technical facets.
Geology
- Continuity & Variability
- Near-mine extensions
- Regional exploration
Resources
- QAQC
- Estimation
- Validation
Mining
- Capex
- Opex
- Modifying Factors
Processing
- Capex
- Opex
- Recoveries
Environmental
- Permitting
- Tailings
- Liabilities
1b Financial DD
The Fund’s investment mandate is driven by the identification of defensive assets and not a predictive ability to accurately forecast pricing or economic cycles.
Returns
- Defensive base case
- Upside opportunities
- Sensitivities
Structure
- Equity
- Asset Level
- Royalty
Market
- Size
- Incentive Price
- Demand / Supply
Funding
- Debt
- Equity
- Other
Exit
- M&A
- Trade Sale
- IPO
1c Qualitive DD
The Fund seeks to critically access a number of qualitative factors as part of the investment process given their potentially binary nature.
Management
- Org. Structure
- Existing Team
- Remuneration
- Key Hires
Country
- Taxation
- Royalties
- Stability
Permitting
- Timeline
- Process
- Precedents
Legal
- Surface Rights
- Mining Rights
- Title
Social
- Social Influence
- Communities
- Artisinals
2 Documentation & Process
Phased, disciplined and structured investment process.
Introduction
Desktop DD
Project Summary
Site Visit
Investment Decisions
Market Thesis
Last commodity super-cycle was largely driven by Chinese demand for early-stage commodities to support rapid urbanisation.
China’s insatiable demand resulted in a period of sustained investments in new sources of supply.
Despite China transitioning to a consumer driven economy they are still expected to remain a material consumer.
Systemic under-investment within the industry over the past ten years will likely affect future supply security and long-term prices.
Majority of capital expenditure has been on existing projects and Life of Mine extensions for early-cycle commodities.
Exploration expenditure and new discoveries has significantly declined over the past ten years.
Commodity markets appear to be decoupling with selective commodities better positioned to generate outsized returns.
Commodity demand and consumption habits will continue to evolve and grow with increasing living standards.
Significant new sources of supply will be required to meet eclectic vehicle demand and energy storage applications.
Opportune time to establish a portfolio of high-quality assets ahead of the next potential commodities super-cycle.
Emerging supply-demand imbalances in mid-cycle commodities as global consumption habits continue to evolve.
Systemic supply side under-investment compounded by continued demand growth and mine attrition closures.
