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Investment Conferences


RARE EARTHS, SPECIALITY
& MINOR METALS
INVESTMENT SUMMIT
                 4.35 – 5.00
           ...
Fund Manager's View
An investor's perspective on the Exotic and Specialty Metals Sector

Adam Darling
Vice President, BNRI...
Fund Manager’s view


     “An investor's perspective on the
        Exotic and Specialty Metals
                   Sector...
Barclays Natural Resource Investments
 Global private equity team, investing in private companies
 Exclusive focus on na...
Why Natural Resources?


World class commodities franchise



Emerging markets expertise          Focus on natural resourc...
How do we invest – what are our key criteria?

 Key criterion - PEOPLE
 Basis of success: find & fund best-in-class team...
What do we look for in a management team?




Proven track record                         We will do a lot of referencing
...
What else?


                                      Aligned with management from the
Alignment of interest
                ...
Balancing risk and reward

 Realistic assessment of risks and reward
 Focus on financial returns
      … cash on cash
 ...
Bringing it together: What works for us?

                                    Committed management
Alignment
             ...
What doesn’t work for us…

Build the new BHP Billiton
Bet on copper being $5/lb for the next 10 years
Management won’t ...
More of what doesn’t work for us…

Team that just wants a day job
Team that just wants a hobby
Acquire 10 x 5% stakes i...
Sounds demanding?
Would you rather be mining or fund-raising?

                                   Average Fundraising per...
We’ve historically found more oil and gas teams with the criteria we look for


 11 teams backed to date, but only 2 mini...
Why are we attracted to Exotic and Specialty Metals as a sector?

 Niche investment sector; less competed
 Assets in att...
Specific Exotic and Specialty Metals concerns

 Competition
    …opaque cost curves, concentrated asset ownership
 Price...
Can we back a management team in Exotic and Specialty Metals?

 We’re choosy about our partners
 But we’re always lookin...
Questions
   &
Answers



            18
Contacts



Adam Darling
+44 (0) 20 7773 1974
adam.darling@barcap.com




www.bnri.com



                          19
Disclaimer
This presentation has been prepared by Barclays Capital - the investment banking division of Barclays Bank PLC ...
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Objective Capital Rare Earth and Minor Metals Investment Summit: An Investors Perspective On Exotic & Specialty Metals - Adam Darling

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Objective Capital Rare Earths, Speciality and Minor Metals Investment Summit
Investing in the Exotic and Speciality Metals Sector
18 March 2010
by Adam Darling, Barclays Capital

Published in: Economy & Finance, Business
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Objective Capital Rare Earth and Minor Metals Investment Summit: An Investors Perspective On Exotic & Specialty Metals - Adam Darling

  1. 1. Investment Conferences RARE EARTHS, SPECIALITY & MINOR METALS INVESTMENT SUMMIT 4.35 – 5.00 Closing Keynote: Investing in the Exotic and Speciality Metals Sector Mark Brown - Managing Director, Head of Barclays Natural Resource Investments THE LONDON CHAMBER OF COMMERCE AND INDUSTRY ● THURSDAY, 18 MARCH 2010 www.ObjectiveCapitalConferences.com
  2. 2. Fund Manager's View An investor's perspective on the Exotic and Specialty Metals Sector Adam Darling Vice President, BNRI March 2010
  3. 3. Fund Manager’s view “An investor's perspective on the Exotic and Specialty Metals Sector” … OUR view, not MARKET view 3
  4. 4. Barclays Natural Resource Investments  Global private equity team, investing in private companies  Exclusive focus on natural resources  18 investment professionals + advisory panel  Invests Barclays money… recently opened to 3rd party capital  $1bn allocated to 10 portfolio companies since 2006 Oil and gas Mining Renewable Power (upstream) (upstream) Energies 4
  5. 5. Why Natural Resources? World class commodities franchise Emerging markets expertise Focus on natural resources private equity Relative lack of competition 5
  6. 6. How do we invest – what are our key criteria?  Key criterion - PEOPLE  Basis of success: find & fund best-in-class teams – YOU  We are management led  Even “good” assets do not run themselves… …so what do we look for in a management team? 6
  7. 7. What do we look for in a management team? Proven track record We will do a lot of referencing Experience, geographical focus, An angle commodity insight… 7
  8. 8. What else? Aligned with management from the Alignment of interest outset Skin in the game Meaningful personal financial investment Clear business plan to make money We ask a lot of questions 8
  9. 9. Balancing risk and reward  Realistic assessment of risks and reward  Focus on financial returns … cash on cash  Ensure management is highly motivated and aligned  Understand key risks  Develop conservative risked base case… with management  Execute business plan with patience 9
  10. 10. Bringing it together: What works for us? Committed management Alignment Competitive advantage Skin in the game Operational enhancement ‘Inside track’ Clear business plan to make money Sensible risk adjusted returns Proven track record Exit strategy within 5-6 years An angle Opportunities for a nimble private company 10
  11. 11. What doesn’t work for us… Build the new BHP Billiton Bet on copper being $5/lb for the next 10 years Management won’t co-invest despite “dead-cert” 4x deal Build $4bn mines Own mine for 30 years Back a team… who have not visited the country they target... 11
  12. 12. More of what doesn’t work for us… Team that just wants a day job Team that just wants a hobby Acquire 10 x 5% stakes in public companies Compete in auctions No ‘inside track’ Team that ramps up a share price in the public markets 12
  13. 13. Sounds demanding? Would you rather be mining or fund-raising? Average Fundraising per Issuance: AIM Mining Stocks 45 40 35 30 25 £m 20 15 10 5 0 2004 2005 2006 2007 2008 2009 BNRI Cheque Source: Ernst & Young New Equity Issue Follow- on Equity Issue 13
  14. 14. We’ve historically found more oil and gas teams with the criteria we look for  11 teams backed to date, but only 2 mining teams (coal, copper)  …despite meeting over 250 mining management teams! Why….?  Private equity model more proven in oil and gas?  Mining industry reliant on public markets?  …are our criteria too difficult in mining? 14
  15. 15. Why are we attracted to Exotic and Specialty Metals as a sector?  Niche investment sector; less competed  Assets in attractive geographies  Projects of manageable scale and cost  Exposure to new and growing industrial applications  Strong public market & strategic interest supports exit routes 15
  16. 16. Specific Exotic and Specialty Metals concerns  Competition …opaque cost curves, concentrated asset ownership  Price …poor forward curve visibility, limited ability to hedge  Marketing …buyer relationships – new project risk extends beyond mine gate  Substitutability …niche uses & industrial customers always looking to save money  Scale …can we invest enough? 16
  17. 17. Can we back a management team in Exotic and Specialty Metals?  We’re choosy about our partners  But we’re always looking  We have capital, time, and patience  Come and see us 17
  18. 18. Questions & Answers 18
  19. 19. Contacts Adam Darling +44 (0) 20 7773 1974 adam.darling@barcap.com www.bnri.com 19
  20. 20. Disclaimer This presentation has been prepared by Barclays Capital - the investment banking division of Barclays Bank PLC and its affiliates worldwide (‘Barclays Capital’). This publication is provided to you for information purposes, any pricing in this report is indicative and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has been obtained from sources believed to be reliable but Barclays Capital does not represent or warrant that it is accurate and complete. The views reflected herein are those of Barclays Capital and are subject to change without notice. Barclays Capital and its respective officers, directors, partners and employees, including persons involved in the preparation or issuance of this document, may from time to time act as manager, co-manager or underwriter of a public offering or otherwise deal in, hold or act as market-makers or advisors, brokers or commercial and/or investment bankers in relation to the securities or related derivatives which are the subject of this report. Neither Barclays Capital, nor any officer or employee thereof accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. Any securities recommendations made herein may not be suitable for all investors. Past performance is no guarantee of future returns. Any modeling or backtesting data contained in this document is not intended to be a statement as to future performance. Investors should seek their own advice as to the suitability of any investments described herein for their own financial or tax circumstances. This communication is being made available in the UK and Europe to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2001. It is directed at persons who have professional experience in matters relating to investments. The investments to which is relates are available only to such persons and will be entered into only with such persons. Barclays Capital - the investment banking division of Barclays Bank PLC, authorised and regulated by the Financial Services Authority (‘FSA’) and member of the London Stock Exchange. Copyright in this report is owned by Barclays Capital (© Barclays Bank PLC, 2005) - no part of this report may be reproduced in any manner without the prior written permission of Barclays Capital. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. EUxxx 20

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