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Mine funding ‘sweet spots’ are in early stages: analyst

Keywords: Tags  Society for Mining Metallurgy and Exploration, mining finance conference, Tocqueville Asset Management, Douglas Groh, Andrea Hotter

NEW YORK — There are a couple of key investment "sweet spots" in mining projects, both of which are prior to the production stage, Douglas Groh, a portfolio manager and senior research analyst at Tocqueville Asset Management LP, said.

These two key points are during the initial discovery stage and then the development stage of a mining project.

"It’s very much a judgment call on people (in these early stages)," he said, referring to management, engineers and geologists. "Of course, it’s also a question of how much capital a miner has to execute a strategy, but there’s an important focus on making an assessment of people."

Assessments change in later stages, aided in part by the additional information available on projects, Groh said at the Society for Mining, Metallurgy and Exploration’s mining finance conference in New York.

"The earlier stages can sometimes be a roll of the dice because you don’t know what mother nature is going to throw at you in terms of geology and so on, but those stages also represent the investment sweet spots," he added.

A focus on management, strategy, price to cashflow and a company’s asset base become more important at later stages, Groh noted.

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