Investment Opportunity

Sustained Minerals Demand Growth
PRCM considers that an attractive private equity opportunity exists in the international mining market as a result of current economic and market dynamics. Sustained economic growth in the developed world combined with the industrialisation of developing countries has created an increasing demand for mineral commodities.

There is a strong correlation between average income levels in a country and metals consumption. China, in particular, has increased its share of world minerals consumption over the past decade and now accounts for greater than 20% of world consumption in several commodities.

This growth has been driven by continuing industrial development and migration of the population to cities, with rising infrastructure requirements and attendant demand for minerals. PRCM believes that this impact on world metals demand will continue and be reinforced by other developing nations.

Increased World Exploration Expenditure
In response to increasing metals demand exploration expenditure has increased substantially, particularly by junior mining companies. There are time lags between exploration expenditure, prospect discovery, project feasibility and development. Therefore, current exploration expenditure and attendant success will lead to subsequent project funding requirements for which PRCM is a natural capital provider.

Industry Consolidation
An increase in merger activity has resulted in the emergence of large mining houses that increasingly seek to focus on large, world scale deposits. PRCM believes that this creates opportunities to acquire non-core operating mines and development projects that will be divested by large companies.

Private Equity an Under-Exploited Form of Mining Financing
To date there has been limited private equity investment in the mining sector. PRCM believes that this creates an opportunity to invest, adopting the disciplined private equity process of investment entry and exit in order to capture the period of maximum value accretion.

Infrastructure and Services
Development of new mining projects and growth in the total volume of minerals extracted requires development of mining related infrastructure and, similarly, provides opportunities for expansion of mining services businesses.