JOHANNESBURG (miningweekly.com) – Recently launched 12J mining fund Concentrate Capital Partners (CCP) is hoping to get one of its first investments approved by year-end.
Speaking to Mining Weekly Online on the sidelines of the 12J Marketplace conference, in Johannesburg, on Thursday, MD Paul Miller said the venture capital company had raised R44-million at the end of February.
The company has a further commitment of R150-million from investors.
“The genesis of CCP predates February. It was put together by private equity fund Stockdale Street and DRA. Stockdale Street took a large investment in DRA and found that the engineers were already starting to invest alongside their clients’ projects,” he said.
Miller explained that DRA had put capital aside and had allocated one-quarter of that to South Africa, so Stockdale and DRA came together to use the benefits of the 12J structure to grow its scale by bringing in third-party investors alongside DRA, with Stockdale Street’s private equity expertise and DRA’s mining expertise, together with access to DRA’s pipeline.
“The major opportunity that we can offer is that mining exploration and production is ten times bigger than any other industry on the 12J. That’s a consequence of mining being so capital intensive,” he said.
He highlighted that even a small mine was a big business by any other measure.
He pointed out that 12J funds offered a big tax incentive, but with that came a lot of rules that need to be complied with . . . ”so you need enough opportunities that can pass through those rules.
“We are focusing on capital preservation by our clients; we’re not taking on greenfield investments or junior miners,” he said.
He noted that CCP could not raise money from the public in South Africa under current conditions, adding that there was too much risk, particularly from the current regulatory environment.
He noted that CCP wanted to ensure that it could pay returns to its shareholders as soon as possible.
“There’s a big incentive, you want to invest according to rules, but there’s no point in being invested forever, because your incentive will decay,” Miller said.
He added that CCP wanted a high level of confidence in its underlying projects and was looking to partner with major mining companies either as offtake partners, contractual partners or co-investors.
“We don’t want to do things alone, we want to make sure all our primary mining risks are mitigated.”