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Canadian private equity player Waterton Global Resource Management LP has raised more than US$1-billion for a precious metals fund, a massive number which demonstrates that private equity interest in the mining space continues to rise.
Toronto-based Waterton announced Monday that it has received capital commitments of US$1.016-billion. It plans to use that money for acquisitions, joint ventures and partnerships in the precious metals sector. The fund will focus on North American assets that are either in production or close to it.
Over the last several months, there has been constant speculation that private equity money is set to pour into the mining space. That talk intensified last week when Mick Davis, the former chief executive of Xstrata PLC, said he raised up to US$3.75-billion for a new mining venture.
Waterton made headlines of its own this year when it launched a hostile $59-million bid for a junior miner called Chaparral Gold Corp. The company has struck more than two dozen deals since launching its first mining fund in 2009, and it now has the capital to pursue many more of them.
Historically, private equity players steered clear of mining because of a lack of technical knowledge and concerns about the sector’s volatility. However, they see opportunities today because junior companies are struggling to raise any money through the equity or debt markets. Many companies are holding on to high-quality projects but cannot move them forward without a capital injection.
Private equity is also interested in mining – and particularly precious metals – for the simple reason that the equities are cheap. It is one of the few sectors that performed poorly in the past year.
For the rest of this article, click here: http://business.financialpost.com/2014/04/06/canadian-private-equity-firm-raises-more-than-1-billion-for-precious-metals-fund/