he natural resources sector remains of fundamental importance to global productivity, economic activity and growth. However, in recent times, chronic underinvestment as well as the natural depletion of global resources has meant that supply for many natural commodities has been unable to keep pace with increasing demand. As a result, the discovery and exploitation of new mineral deposits has become increasingly difficult, particularly when combined with general market apathy for the resources space. Despite recent advances in mineral exploration techniques and automation which have allowed us to explore deeper and safely mine increasingly difficult & lower grade deposits, we must continually challenge traditional paradigms and conventional views of the industry to present innovative solutions. Such a step change in thinking will serve to support the resources sector, and specifically the juniors over the longer-term, who have been shouldering the majority of the burden for finding and developing new discoveries.
Since Adam Miethke and Adam Santa Maria founded Discovery Capital Partners two years ago, the ability to form a differential view on assets, markets and jurisdictions has been central to their business model of providing tailored strategic solutions to support the growth of mining and exploration companies. For the Discovery team, this means maintaining a disciplined mandate of only supporting quality projects with their capital markets, advisory and investor relations expertise.
“We are a bespoke team who are financially aligned with management and shareholders on the upside. We seek to look through the cycle and focus on longer-term value creation by backing quality assets and management teams with a supportive shareholder base. Central to this is our well-established global network of financial and corporate relationships,” said Adam Miethke, Joint Managing Director.
Unfortunately, the metals and mining sector is inherently more complex than simply combining quality management teams with quality assets. The sector represents an amalgamation of technical, financial, and social challenges, all of which must be constantly reviewed throughout the development cycle to maximise value. The Discovery team combines a unique mix of geological, operational, financial and commercial expertise gained through extensive experience in exploration, production, investment banking and private equity. Collectively, Discovery has helped raise over $100m in finance for its clients in its short history and the team have completed over $100bn of transactions during their combined careers.
With the right team and expertise, the vast majority of these risks are identifiable. However, the junior mining sector will always remain beholden to general market sentiment and commodity market direction. What’s more, the cyclical nature of the equity markets means the long-term and capital intensive structure of the metals and mining industry are often misaligned. Discovery is cognisant of this disconnect and seeks to build a sustainable capital structure with a mixture of retail, institutions and strategics, as demonstrated by the recent Adriatic Metals raising.
“Traditional mindsets that exclude considerations of where the next major value events will be created act as a cap on potential. Companies that are able to focus on quality and present solutions that cater for real world need, regardless of what would traditionally be perceived as impediments will ultimately be successful” says Adam Santa Maria, Discovery’s Joint Managing Director.
“Unfortunately, the metals and mining sector is inherently more complex than simply combining quality management teams with quality assets. The sector represents an amalgamation of technical, financial, and social challenges.”
Over the preceding two years, Discovery has successfully supported a number of high potential resource companies in listing on the ASX and raising capital, including the IPO of Adriatic Metals, which was awarded Deloitte’s most successful IPO of 2018. Adriatic’s success was in a large part due to the quality of the asset and management but also to the marketing, institutional and corporate support, and the strategic investment made by Sandfire Resources, all arranged by Discovery. Discovery understands that the junior mining sector is critical to the broader success of the mining industry, serving to both provide an incubator of new projects to feed the underinvestment made by the mining majors over the past five years, whilst also providing shareholders with real asset exposure to mineral exploration and development. This rapidly changing investment landscape means companies must take much more care in their alignment and strategic objectives as they navigate complex and evolving challenges.