Junior Mining Stocks_________________Of Note:“It's a perfect time to become a traditional old-time merchant banker.”
Ned Goodman is trying to raise as much as $500-million for the new venture called Ravensden Resource LP.
"There are a lot of institutional portfolios that would love to get a name off their list before year-end so they don't have to
show their clients they paid $10 for something that is trading at $1,”
“Our job is going to be putting the good management, the good projects and the cash together in one company and helping them build.”Ravensden will also earn fees similar to those levied by hedge funds, including a 2-per-cent annual management fee and a 20-per-cent performance bonus.________________________________________
To access my current posts, click the following link:Notes From a Cyber Trader___________________________________________________________________________________________________________________________________________Wanted: beaten-up junior mining stocks
The Globe and Mail
December 11, 2008 at 8:32 PM ESTNed Goodman
wants your battered, beaten and illiquid resource stocks. From Abacus Mining and Exploration Corp. to Zoloto Resources Ltd. and a bulging list of more than 300 companies in between, he's willing take the decimated shares off your hands in exchange for a tax loss and a stake in a new diversified mining fund
At a time when the IPO market has all but disappeared and the junior mining market is in tatters, the 71-year-old Bay Street veteran is trying to raise as much as $500-million for the new venture called Ravensden Resource LP
. He hopes the publicly traded fund will become a significant merchant bank to the devastated resource sector.
“The market has fallen out of bed. I grasp that as being an enormous opportunity. This is the first time in my career where I've seen a total dry-up of available capital to the resource industry
,” Mr. Goodman
, the founder of the Dundee group of companies
, said in an interview this week.
If successful, Ravensden will end up with large stakes in scores of struggling resource companies. While many of those positions will be sold to raise cash for the fund, the crux of the plan is to consolidate the best assets and management teams to create stronger, well-financed mining companies poised to capitalize on what Mr. Goodman believes is a looming rebound in metals demand
“Our job is going to be putting the good management, the good projects and the cash together in one company and helping them build,” he said.
The most promising firms on the Ravensden list include at least a half-a-dozen junior miners that were on the brink of triumph before being T-boned by the global credit crunch. Among them is Mirabela Nickel Ltd
., whose once lofty share price has been pummelled as the company has struggled to secure the money needed to build a promising mine in Brazil. If all goes according to plan, Mr. Goodman's already significant influence on Mirabela is likely to get even stronger. Dundee Corp., where Mr. Goodman is CEO, already owns 20 per cent and that stake will be rolled into Ravensden along with any other shares in Mirabela that are sold to Ravensden in exchange for units in the fund
. Because it is structured as a partnership, Ravensden will be able to own more than 20 per cent of the company.
Of course, shareholders of Mirabela or any other beleaguered mining firm on the list are under no obligation to exchange their shares, Mr. Goodman points out. But he thinks there are plenty that will.
“There are a bunch of people who bought these stocks at much higher prices
. You know what people have been doing to stocks lately. They would love to sell them and sometimes they own a bunch of them and there is no bid. I'm hopeful we'll find some of those guys. There are a lot of institutional portfolios that would love to get a name off their list before year-end so they don't have to show their clients they paid $10 for something that is trading at $1,
” he said.Ravensden will also earn fees similar to those levied by hedge funds, including a 2-per-cent annual management fee and a 20-per-cent performance bonus
.Merchant banking is nothing new to Mr. Goodman
, a geologist by training. Over a span of four decades, he has had a hand in the creation of an impressive list of Canadian mining firms including Iamgold, the original Franco-Nevada, and Kinross Gold
. Kinross emerged in the early 1990s from a venture not unlike Ravensden. It is now one of the world's largest gold miners.
Mr. Goodman is also betting Ravensden's team of industry veterans will be able to identify hidden gems among the ruins of junior miners by using what he calls “legal inside information
.” Through publicly available information, site visits and other data, the Ravensden team plans to compile its own resource estimates similar to a so-called 43-101 study. Without an official, regulator-sanctioned 43-101 study, juniors are prohibited from speculating on the size of their resource. But 43-101s can cost millions of dollars. “We're not going to write 43-101s for the public; we're going to write 43-101s for ourselves. That is legal. That is brainpower
,” Mr. Goodman said.
Ravensden is expected to be the first in a series of merchant banking ventures. There are already plans for another offshore merchant banking fund that could raise between $1-billion and $2-billion.
“We expect that we are going to become one of the largest purveyors of capital to the global resource industry,” he said. “It's a perfect time to become a traditional old-time merchant banker