Aerecura Capital Corp Discusses the Mining Sector and Alternative Financing Options for Juniors
“2016 was an oasis year in what has been a
long desert for financing junior miners “- David Stein, MSc., CFA
Point Roberts, WA,
Delta BC, January 17, 2017 – Investorideas.com, a global news source and
investor resource covering mining stocks releases an exclusive interview with David Stein, MSc., CFA, of Aerecura Capital
Corp http://www.aerecuracapital.com/.
David talks to Cali Van Zant of Investorideas.com
about the founding of his company, the current financing landscape and what he
sees for the sector moving forward.
Q: Investorideas.com
David, can you share
your background in the mining/ resource sector and how and when you founded your
new firm Aerecura Capital?
A: David Stein, MSc, CFA, of Aerecura
Capital Corp
Cali, I founded the
Company just last year, at the same time I resigned as CEO of Aberdeen
International.
As CEO of Aberdeen, I
successfully repositioned the company to allow us to use our balance sheet to
make private equity-style investments in the mining sector that were exclusive
to Aberdeen – extremely important in the context of a public company. This was
not accomplished overnight, but rather taking more than four years of intense
energy; managing several successful exits in a declining resources market,
spinning out the Ore Acquisition Partners fund, and developing new
relationships in the private equity space.
Now moving on from
Aberdeen, I founded Aerecura to focus investing my own capital on niche
strategies in the mining sector that can generate high risk-adjusted returns,
and at the same time to be a partner with technical expertise and investment
experience for other institutional investors. Some of the niche strategies I
have been looking at recently include hybrid debt, flow-through investing and
secondary mining PE transactions. Building on my role as Portfolio Manager for
Ore Acquisition Partners, LP (a secondary PE mining fund) I have decided to
focus on growing this strategy – which I believe has much larger potential.
Q: Investorideas.com
What are your
predictions for 2017 for the sector with the US election now concluded? The
evening of the election gold spiked and has since settled in but there are a
lot of bulls still out there – where do you see it headed short term and long
term?
A: David Stein, MSc, CFA, of Aerecura
Capital Corp
Despite the
short-term expectations of rate increases, we are still in a negative real
interest rate environment that should be positive for gold and precious metals.
Rate increases (which are now expected) are inherently negative for gold in
short term, however I believe it’s unlikely that rates will be increased above
inflation, without triggering a significant recession. Therefore, I am bullish
that in the longer term (1 year+) gold will perform well relative to other asset
classes. I think the next year will be volatile until we can see some broader
global themes start to take shape.
Q: Investorideas.com
The financing
landscape has changed over the last few years with access to crowd funding and
other different alternative financing options. Can you give us some insight as
to what you have seen work and not work and some of the alternative financing
options you offer for juniors?
A: David Stein, MSc, CFA, of Aerecura
Capital Corp
2016 was an oasis
year in what has been a long desert for financing junior miners. With stock
prices on the rise from their multi-year lows, what I saw was that many
well-managed and aggressive public companies were able to use their stock
currency to get financings done. I would say the initial burst for crowdfunding
was successful. However the actual dollars raised was tiny – reflecting that it
is still early days in retail investor adoption combined with early days in a
(potential?) bull market. I saw some interesting hybrid debt deals get done,
with very favourable terms for the investor, but again the deal sizes were
small.
The group I saw
struggle the most was private mining juniors. In the early stages of a
recovering public market, it has been difficult to compete for new capital with
listed juniors. In my view there is still some tremendous value in this group,
which will probably be rushing to go public in 2017.
Q: Investorideas.com
Your firm looks to
invest in “under-the-radar and underserved investment strategies”. Can you give
us some insight as to why this strategy and how this works for both investors
and the companies you invest in?
A: David Stein, MSc, CFA, of Aerecura
Capital Corp
At the moment, I am
focused on providing liquidity in the secondary private equity market. There
has been an explosion of private equity money dedicated to and invested in the
sector be since 2012 – more than $10 billion was raised for dedicated mining PE
products and many more dollars are in multi-strategy funds and off-market
vehicles. Rather than competing directly with these other investors, Aerecura
looks to be a partner and liquidity provider. This could be helping an investor
that is changing strategy buy or sell private mining stakes, or it could be
helping a larger mining company clean up its non-core holdings and generate
cash to reinvest in the business. Aerecura does its own analysis and due
diligence and invests its own capital alongside its partners in every deal.
Once I have a
position in any particular company, I can provide my expertise to the
management and board to help raise further capital and assist with strategic
options as necessary.
Q: Investorideas.com
And lastly can you
offer any advice for junior mining companies wanting to raise capital this year?
A: David Stein, MSc, CFA, of Aerecura
Capital Corp
I feel the outlook is
still very uncertain, so avoid the temptation to time the market or over-shop
your offering. Be prepared at all times to transact. Maintain on-going and
positive relationships with as many types of investors as you can: from large
strategic investors to retail investors. Keep your administrative affairs and
governance in order, so that you can close quickly—which may be necessary in a
volatile market. If you have less than
18 months of budgeted capital, you should be preparing for a financing now.
About Aerecura Capital Corp
Toronto-based
Aerecura was founded in 2016 to capitalize on investment opportunities in the
metals, mining and natural resources sector. Aerecura identifies and executes
under-the-radar and underserved investment strategies and invests its own
capital alongside its partners. More info at http://www.aerecuracapital.com/
About David Stein
David has been
involved in finance and investment in the mining sector since 2001, most
recently as President and CEO of Aberdeen International, a publicly traded
mining-focused investment company. He remains a director and consultant to
Aberdeen.
During 7 years with
Aberdeen, David spearheaded a number of important investment initiatives,
generating strong returns during the last bull market, and capitalizing on
opportunistic transactions during the recent downturn for natural resources.
Among those many deals was the spin-out of Ore Acquisition Partners LP in 2015,
a private equity mining fund that he manages today.
Prior to Aberdeen,
David started his career in finance with Cormark Securities’ predecessor,
Sprott Securities Inc. where over 9 years he worked on both the investment
banking and research teams as an Analyst, and later a Director and member of
Cormark’s Executive Committee. While a research analyst, David achieved a
strong reputation as innovative stock-picker, and was in many cases the first
analyst to pick up coverage of small and micro-cap stocks that would later be
acquired or have grown to be large cap stocks on the TSX today.
Both of these phases:
research analyst and investment manager; have helped David shape his mining
industry network, valuation and diligence skills and transaction capability
making him a leader amongst the next generation of mining finance.
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