INVESTING IN THE AFRICAN MINING SECTOR

An interview with Julian Treger, Director & CEO, Anglo Pacific Group

Julian Treger joined Anglo Pacific as Chief Executive Officer and Executive Director on 21 October 2013. 

Julian has an MBA from Harvard Business School and a BA from Harvard University. He began his career working for Lord Rothschild as an in-house corporate financier, managing a portfolio of public and private equity investments before co-founding Active Value Advisors Ltd. to invest in undervalued, predominantly UK-listed companies, where he advised on more than US$900.0m of funds over a 12-year period. 

Most recently, he has served as one of the principals of Audley Capital Advisors LLP, an investment advisory firm, which he co-founded in 2005, managing value-orientated, special situations investment strategies through hedge fund and co-investment vehicles, with a principal focus on the natural resources sector. Julian also holds an external Non-Executive directorship with Mantos Copper S.A.
 

1. HOW LONG HAVE YOU BEEN ATTENDING MINING INDABA AND WHAT ARE SOME OF THE MAJOR CHANGES YOU’VE WITNESSED IN AFRICAN MINING OVER THAT TIME? HOW HAVE YOU SEEN MINING INDABA EVOLVE?

I have been going to the indaba for longer than I can recall, and over that time I have seen waves of enthusiasm and disappointment for African mining where government policies have frustrated the realization of the benefits of the mining cycle. But the indaba has always been a good place to observe and debate these developments and under new ownership it has definitely upped its game. 
 

2. WHAT ARE THE MAJOR CHALLENGES AND OPPORTUNITIES YOU SEE FOR THE MINING SECTOR IN AFRICA AND GLOBALLY?

The challenges are communication of the benefits, the poor image, lack of innovation, adoption of diversity, need for cost control, the rise of passive investing and ethical funds, etc but those are also the opportunities. Valuations are low and capital scarce – it’s a buyer’s market - but buying will only be profitable if the sector gets its act together to demonstrate its relevance and attraction to the wider community. 
 

3. MUCH HAS BEEN MADE OF THE RECENT ANNOUNCEMENT OF THE BARRICK AND RANDGOLD MERGER; DO YOU SEE THIS AS SIGNALLING A NEW PERIOD OF CONSOLIDATION FOR THE SECTOR? WILL THERE BE A FOCUS ON INCREASING PRODUCTION PROFILES AND RESERVES OR MAINTAINING A POSITION ON THE COST CURVE?

The merger is a result of the derating of the gold sector and the fact it is now cheaper to buy than to build new mines. If low stock market valuations continue, then I fully expect more M&A and consolidation. This will allow better production profiles and reserves and needn’t compromise the position on the cost curves. 
 

4. THE JUNIOR SECTOR HAS BEEN GOING THROUGH A CHALLENGING PERIOD. HOW HAVE YOU SEEN EXPLORATION AND DEVELOPMENT FUNDING MODELS CHANGE IN RECENT YEARS AND WHAT MODELS DO YOU THINK WILL EMERGE IN THE FUTURE?

The shortage of capital will require new models, more joint ventures, perhaps crowd funding by high net-worths, more earn ins. The majors will not bail out the juniors so people need to be more inventive about how to move forward.
 

5. WHAT IS YOUR APPROACH TO MANAGING JURISDICTIONAL RISK WHEN CONSIDERING A NEW INVESTMENT?

Jurisdiction trumps everything else so we try to stick to safe places. 
 

6. LASTLY, WHAT ADVICE WOULD YOU PROVIDE TO BUDDING ENTREPRENEURS WITH EARLY-STAGE PROJECTS LOOKING FOR FUNDING FROM ANGLO PACIFIC AND THE INVESTMENT COMMUNITY IN GENERAL?

Show the potential and scale. Only exceptional projects will find funding in today’s market.

Julian Treger will be an investor judge for the 2019 Investment Battlefield, as well as taking part in the fireside chat: 'Invest, acquire or merge – how is the sector going to grow?' at Mining Indaba. Find out more about the agenda and register online to attend.