minesouthamerica: focus on colombia seminar 17 june 2010 financing mining projects in south america...
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MineSouthAmerica: Focus on Colombia Seminar
17 June 2010
Financing Mining Projects
in South America
Simion S. Candrea
Mining Investment Banking
2
This presentation was prepared exclusively for the benefit and internal use of the Jennings Capital client whom it is directly addressed and delivered (including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by Jennings Capital. Neither this presentation nor part of its contents may be disclosed or used by any other purpose without the prior written consent of Jennings Capital.
The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views on this date, all of which are accordingly subject to change. Jennings Capital’s opinions and estimates constitute Jennings Capital’s judgment and should be regarded as indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the asset, stock, or business of the Company or any other entity. Jennings Capital makes no representations as to the actual value which may be received in connection with neither a transaction nor the legal, tax or accounting effects of consummating a transaction. Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects.
Jennings Capital’s policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to change a rating or price target, to a subject company as consideration or inducement for the receipt of business or compensation. Jennings Capital also prohibits its research analysts from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit investors.
Jennings Capital Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone not affiliated with Jennings Capital of any of the matters addressed herein or for the purpose of avoiding tax related penalties.
This presentation does not constitute a commitment by Jennings Capital to underwrite, subscribe for or place any securities or to extend, arrange or provide any other services.
33
Presentation HighlightsPresentation Highlights Investing Rationale:
Why Colombia
Financings Projects/ Companies in Colombia
Mechanisms
Recent capital markets trends
Future
Jennings Capital Inc./ Case Study: Greystar Resources
Financing Mining Projects in Colombia/ South America
Investing in Colombian: Rationale
Jurisdiction and mining legislation
One of the most underexplored mineral regions
Stable democracy for over 60 years
Accessing International Capital Markets Listing on the TSX/ TSX V: IPO, RTO
Straight Equity Financings
Project Financings: Debt, Equity, Exotic
Capital providers: individual & institutional investors, strategic partners, supranationals
Jennings Capital Inc.
Independence
Full service investment dealer
Expertise in mining
Partnership model
44
GDP & Economic Growth
Experienced accelerating growth between 2002 and 2007 2008: US$242 billion, 2009: US$235 billion Mining and Oil & Gas sectors – significant contributors to GDP
Politically Stable and
Environmentally Friendly
Government is a popular two-term administration with a “right of centre” political orientation and active pro-business policies
No history of nationalizing foreign holdings or defaulting on foreign debt
Clear environmental approval system
Favorable Climate for Investment
Mining investment in 2010 forecasted at around $3 billion (Minister of Mining Hernan Martinez)
The World Bank ranked Colombia as the most business friendly country in Latin America
Legal Stability Contracts with Colombian Government Free Trade Zones – 15% income tax, allowing sales in the local
market
Mining Leadership
Latin America’s largest coal producer, 2nd largest gold producer, 4th largest oil producer, and only platinum producer
Modern, incentive structured Mining Act (passed new mining laws in 2001)
Active international mining company presence with several large scale operations with attendant port and railroad facilities
Cerro Matoso – BHP Billiton’s nickel laterite mine (operating since 1982)
El Cerrejon – coal mining JV between BHP Billiton, Anglo American, and Xstrata
Pacific Rubiales – oil & gas Anglo Gold re-establishes/ relocates, in 2006, expl.
office from Lima
Why Invest in Colombia?
Source: “Invest in Colombia”; Thomson Reuters
55
Doing Business in Colombia
Source: World Bank “Doing Business 2010 Report”
Colombia - the most business friendly country in Latin America 2010 (The World Bank - “Doing Business Report”)
Colombia - named as a Top 10 reformer for the last 4 years
From 2007 to 2010, Colombia improved 42 positions, reaching 37th in the ranking of 181 countries
66
Investor Protection in Colombia
*Ranking made up by 183 countries
Colombia Ranks No.1 in Latin America that Best Protect Investors*Colombia Ranks No.1 in Latin America that Best Protect Investors*
Source: World Bank “Doing Business 2010 Report”
77
TSX: 21 cos, 80 propsTSXV: 27 cos, 76 propsTSX: 21 cos, 80 propsTSXV: 27 cos, 76 props
TSX: 23 cos, 81 propsTSXV: 34 cos, 143 propsTSX: 23 cos, 81 propsTSXV: 34 cos, 143 props
TSX: 22 cos, 56 propsTSXV: 35 cos, 84 propsTSX: 22 cos, 56 propsTSXV: 35 cos, 84 props
TSX: 7 cos, 23 propsTSXV: 17 cos, 42 propsTSX: 7 cos, 23 propsTSXV: 17 cos, 42 props
TSX: 30 Co’s, 114 propsTSX V: 53 Co’s, 143 propsTSX: 30 Co’s, 114 propsTSX V: 53 Co’s, 143 props
TSX: 7 Co’s, 21 Different Properties
TSXV: 9 Co’s, 17 Different Properties
TSX: 5 cos, 11 propsTSXV: 6 cos, 24 propsTSX: 5 cos, 11 propsTSXV: 6 cos, 24 props
TSX: 9 cos, 9 propsTSXV: 6 cos, 21 propsTSX: 9 cos, 9 propsTSXV: 6 cos, 21 props
TSXV: 2 cos, 19 propsTSXV: 2 cos, 19 props
TSXV: 3 cos, 4 propsTSXV: 3 cos, 4 props
TSX: 10 cos, 22 props
TSXV: 10 cos, 26 props
TSX: 10 cos, 22 props
TSXV: 10 cos, 26 props
Source: the TMX Group
Colombia is a Focus for TSX/ TSX-V Mining Companies
88
GRAMALOTE 2009: 1.04 M Au oz
Indicated & Inferred
Owners: B2Gold (JV with AngloGold Ashanti)
CERREJON World’s largest open
pit coal mining operation
2008: 736.3 Mt 2P; 1,379.9 Mt M&I
Operator: Anglo American
MARMATO 7.5 M Au oz M&I; 2.2 M
Au oz Inferred
Owner: Medoro Resources
LA BODEGA Hosts high-grade Au in
the La Mascota Zone
Owner: Ventana Gold Corp.
PAVO REAL PROJECT Exploration stage
Up to 50 g gold in surface samples
Owner: Miranda Gold
ANGOSTURA Largest undeveloped gold
project in the world
11.5 M Au oz M&I; 3.5 M Au oz Inferred
Owner: Greystar Resources
P E R U
Colombia: Large Undeveloped Gold and Coal Mines
LA COLOSA 2009: 12.32 M Au oz M&I
Owner: AngloGold Ashanti
Current Coal Reserves 17 Billion Tons; Annual Production of Only 73.5 Million Tons
Current Coal Reserves 17 Billion Tons; Annual Production of Only 73.5 Million Tons
Colombia Based
TSX Listed Co’s:
Alder Resources ltd.
AngloAmerican PLC
AngloGold Ashanti
Antioquia Gold
Colombian Mines
Galway Resources
Medoro Resources
Miranda Gold Corp.
Ventana Gold Corp.
OroAndes Resource
Colombia Based
TSX Listed Co’s:
Alder Resources ltd.
AngloAmerican PLC
AngloGold Ashanti
Antioquia Gold
Colombian Mines
Galway Resources
Medoro Resources
Miranda Gold Corp.
Ventana Gold Corp.
OroAndes Resource
Source: Invest in Colombia; Company Reports
9
Colombia – next exporter of crude since 1980s; production peaking @ ~860 MBbl/d (Dec 1998) and dropping to ~540 MBbl/d in just 24 months, a 37% reduction
Colombia was at risk of becoming a net importer of oil
Colombia - currently produces ~776 MBbl/d of crude while consuming ~234 MBbl/d
Current production ~ 19.5% higher than the same period last year
Downward trend has clearly been reverted
2008 - Colombia stated its goal - doubling production by 2015 ~ equating to roughly 1.3 MMBbl/d
Which would require multitude of exploration wells, followed by extensive development scenarios post success
Round Colombia 2010 - contains 225 blocks for auction
Resulting in a dramatic increase in demand for drilling rigs during the next few years
All exploration and production contracts contain a minimum one well commitment (exploration or stratigraphic - onshore only) in the first 36 months
The Round Colombia 2008 had 158 blocks up for auction, with the ANH receiving bids on 80 blocks - most of these blocks contain the aforementioned minimum work commitments
9
Colombia: Untapped O&G Potential
Source: Jennings Capital Inc. Research; EIA
10
Colombian Elections: June 20th, 2010 (Second Round)
Aurelijus Rutenis Antanas Mockus Šivickas
Born: August 10th, 1951
Leader: Colombian Green Party
(Partido Verde Colombiano)
Green party - "political middle“
Professor & researcher: between 1975 and 1993
Juan Manuel SantosJuan Manuel Santos Antanas Mockus Juan Manuel Santos Calderón
Born: March 25th, 1952
Leader: Social Party of National Unity
(Partido Social de Unidad Nacional or “Partido de «la U»)
Liberal conservative - Colombia's largest political party
Both Candidates Support President Uribe Policies
First Round - May 30th, 2010: Santos 46.57% vs. Mockus 21.5%
Former Defense Minister
Economics - University of Kansas; Economic Development and Public Administration: London School of Economics, Business & Journalism: Harvard
Former Mayor of Bogota
Math degree: University of Burgundy in Dijon, France MA in philosophy: National University of Colombia
1111
Access to capital enables production growth (organic and through acquisitions): TSX has a proven track record of financing, listing and trading mining companies with 57% of the
world’s public mining companies on TSX Canadian Equity Markets raised 7 times AIM, 2.5 times ASX and 2.5 times LSE for mining
companies in 2009
Liquidity event and re-valuation for the main, private shareholders/ owners Access to larger, more international institutional investors and greater analyst coverage:
Over 30 seasoned independent analysts
Better liquidity, higher market capitalization and higher trading multiples, implying higher valuations
Globally visible specialized indices S&P/TSX Global Gold Index; S&P/TSX Global Mining Index
Strengthening of Management and Board of Directors: Share ownership and options give the Company the currency to attract talent Exchange mandate to mentor management of newly public companies Pool of talent for outside directors
Ability to finance international projects: TSX/ TSXV mining companies have 10,000 projects around the world – 50% are outside of
Canada Colombia based only - on the TSX/ Main Board - 7 Companies with 21 properties, while the
junior TSXV maintains listing for 9 Companies holding 17 Colombian based properties
Corporate Governance: Canada offers a balanced corporate governance approach and sophisticated capital markets
compared with other resource exchanges
TSX Value Added: Time, Flexibility and Visibility
Leading Natural Resources with Best in the World Mining ExpertiseLeading Natural Resources with Best in the World Mining Expertise
12
What's Listed on TSX and TSX Venture Exchange as at May 31, 2010What's Listed on TSX and TSX Venture Exchange as at May 31, 2010
TSX Value Proposition for Mining & Oil and Gas
Sector ($ Millions) ($ Millions) ($ Millions)Comm. & Media 15 1% 565 1% 33 2% 119,450 7% 48 1% 120,015 6%Clean Technology 79 4% 1,307 3% 48 3% 16,827 1% 127 3% 18,134 1%CPC 186 9% 91 0% - 186 5% 91 0%Diversified Industries 126 6% 1,406 4% 282 19% 240,583 13% 408 11% 241,989 13%ETFs - 155 10% 38,744 2% 155 4% 38,744 2%Financial Services 47 2% 524 1% 77 5% 458,283 25% 124 3% 458,806 25%Forest Products 3 0.1% 99 0.3% 20 1% 14,896 1% 23 1% 14,995 1%Life Sciences 69 3% 861 2% 62 4% 10,426 1% 131 4% 11,287 1%Manufacturing 85 4% 513 1% - 85 2% 513 0%Mining 1,128 52% 22,450 57% 328 22% 362,581 20% 1456 40% 385,030 21%Oil & Gas 267 12% 9,501 24% 117 8% 349,663 19% 384 10% 359,164 19%Other 5 0.2% 24 0.1% - 5 0.1% 24 0%Real Estate 35 2% 638 2% 45 3% 40,530 2% 80 2% 41,168 2%Structured Products - 220 15% 25,898 1% 220 6% 25,898 1%Technology 128 6% 1,284 3% 71 5% 58,190 3% 199 5% 59,474 3%Utilities & Pipelines 5 0.2% 53 0.1% 27 2% 82,117 5% 32 1% 82,169 4%TOTAL 2178 100% 39,314 100% 1485 100% 1,818,187 100% 3663 100% 1,857,501 100%
As at May 31st, 2010 (Year-to-Date); Source: TMX Group
TSXV and TSXListed Issuers Total Market Cap
TSX Venture Exchange Toronto Stock ExchangeListed Issuers Total Market Cap Listed Issuers Total Market Cap
13
Special Purpose
Acquisition Corp (SPAC)(Used mainly by small cap, early stage non-producing companies)
Early Stage Companies:
Most effective: cost and speed
Expertise in home capital markets
Existing shareholder base
Capital Pool Company
(CPC)
(Used mainly by small cap, early stage non-producing companies)
Reverse Takeover/Rever
se Merger (RTO)
Qualifying Transaction
/ Acquisition
Initial Public
Offering (IPO)
Dual Listing:
TSX, BVL
Used
main
ly b
y s
mall c
ap
, earl
y
sta
ge n
on
-pro
du
cin
g c
om
pan
ies
Effective Methods to Go Public on TSX: IPO vs. RTO
Explorer vs. Developer vs. Producer: Venture Exchange vs. Main BoardExplorer vs. Developer vs. Producer: Venture Exchange vs. Main Board
14* Assumes two rounds of comments
Week 2 to Week 8 to Week 1 Week 2 Week 6 Week 7 Week 12 Week 13-16 Week 19 Week 20
ProcessPrivate Due Preliminary Final due Circulate finalShares listed; company diligence due diligence diligence prospectus; commenceretains TSX work session prior session close tradingmember to to filing transactionmanage the preliminaryprocess prospectus
DocumentationEngagement Engineering Prospectus File preliminary Security File amended Receipt of letter, term and technical drafting; prospectus Commission*; prospectus; finalsheet signed reports financials and greensheetTSX comments;Submission of prospectus;
prepared prepared Agency sponsorship Signing of and finalized and finalized Agreement letter Agency
drafted Agreement
MarketingPresentation Market Commence
Commence
Finalize the preparation planning marketing with
building the list
bookpreliminary
of potential
prospectus
purchasers
and greensheet
("the book")
Week 17 Week 18
Becoming Public: IPO Route
IPO Process, Documents Required and Approximate TimingIPO Process, Documents Required and Approximate Timing
Principal Documents Required:
Preliminary Prospectus
Audited, and Unaudited Interim, Financial Statements
Agency Offering/Underwriting Agreement and Sponsorship Agreement
Principal Documents Required:
Preliminary Prospectus
Audited, and Unaudited Interim, Financial Statements
Agency Offering/Underwriting Agreement and Sponsorship Agreement
Types of Listing: Conditional listing - Permits listing of
shares on TSX pending completion of the IPO, then the company becomes fully listed after the IPO is completed
Standard form listing - For a previously listed company
Wrap-around listing - For a previously listed company
Types of Listing: Conditional listing - Permits listing of
shares on TSX pending completion of the IPO, then the company becomes fully listed after the IPO is completed
Standard form listing - For a previously listed company
Wrap-around listing - For a previously listed company
15
RTO
Colombian Private Co.
CPC/ Shell Co.
New Investors
TSX Listed Colombian Public Co.
$$
1.
2.3.
Becoming Public via RTO: Deal Structure
TSX Listing Criteria
Financial:
Adequate Funds to Commercialize
C$4 Million Net Tangible Assets
18 Month Projection of Sources
Distribution:
Public Float of C$4 million
300 Public Shareholders
Technical:
3 Years of Proven and Probable Reserves
TSX Listing Criteria
Financial:
Adequate Funds to Commercialize
C$4 Million Net Tangible Assets
18 Month Projection of Sources
Distribution:
Public Float of C$4 million
300 Public Shareholders
Technical:
3 Years of Proven and Probable Reserves
Reverse Merger/ Qualifying Transaction Mechanics
Reverse Merger/ Qualifying Transaction Mechanics
“Canadian Domiciled”
Shareholders
16
Current Market ConditionsCurrent Market Conditions Worldwide equities – regaining ground after the
May 2010 sell-ff:
European debt concerns, emerging markets raw materials demand fatigue, weak recovery in the US
The outlook is one of deflation, corporate balance sheet strength and liquidity, intense volatility and ongoing sovereign credit concerns
The era of frugality is clearly intact (D. Rosenberg)
The Fed will likely be on hold for an extended period of time
Financing Mines in Latin America: Markets and Sources
Capital Sources & Developments (cont’d) Sustained appetite for precious metals producers
In contrast with Spring/ Summer 2009, bank debt providers actively pursuing lending mandates
New capital providers/ sources available for South America
VPP (Volumetric Production Payments or metal stream deals); i.e. Sandstorm Resources Ltd.
Luna Gold – Aurizona Project/ Brazil – US$ 17.8m
SilverCrest Mines – Santa Elena, Mexico – US$ 12m
Forward gold sale agreements: Macquarie Bank
Carpathian Gold – RDM Gold Project/Brazil – US$ 30m
Supranationals – International Finance Corp. (IFC)
Greystar Resources Ltd. – C$12m private placement
New developments:
Traditionally, project debt financing would close after equity tranche already raised/ finalized
Currently, more equity investors require debt financing details/ finalization before committing capital
Board representation sought by equity investors
Capital Sources Private/ owner’s capital – very early stages, pre-resource, private
companies
Equity and debt capital markets for publicly listed enterprises:
TSX/ TSX V; dual-listings (i.e. BVC)
Bank debt/ non-bank debt – yield, covenants, hedging
Strategic partners/ JVs
Non-traditional/ exotic sources of financings
17
Equity Markets: SnapshotEquity Markets: Snapshot New Listings Count: 214 (TSXV: 134 TSX:
80)
114 Canadian Companies + 36 CPCs + 33 ETFs + 8 Structured Products
All listed on the TSX Venture Exchange (120) and TSX (71) in the first five months of the year
7 US Companies + 1 US Structured Note
All listed on the TSX Venture Exchange (6) and TSX (2) in the first five months of the year
15 International Companies
All listed on the TSX Venture Exchange (8) and TSX (7)
Financing Mines in Latin America: TSX Statistics
Current Financing Environment Financings up 269% on TSXV
$3.17 billion raised vs. $859 million at this time last year
951 financings vs. 606
$3.3 million – average financing size on TSX Venture Exchange
15 company IPOs on TSX
42 ETF / Structured Product IPOs
$4.07 billion in IPO financing vs. $952 million at this time last year
$50.8 million – average financing size on TSXChina / Asia, 2, 9%
UK / Europe, 1, 4%
Other, 3, 13%
Mexico & Central / South America, 5,
22%Australia / New Zealand / Papua New Guinea, 4,
17%
USA, 8, 35%
Source: TMX Group – The MiG Report May 2010
18
What's Financed on TSX and TSX Venture Exchange by Sector (May 31, 2010 YTD)
What's Financed on TSX and TSX Venture Exchange by Sector (May 31, 2010 YTD)
Equity Capital Markets: Financing Environment
Sector IPO PO PP Total IPO PO* PP Total IPO PO PP Total
Comm. & Media - - 29.5 29.5 - 19.0 1.5 20.5 - 19.0 31.0 50.0 Clean Technology - 50.1 27.1 77.2 270.7 122.8 73.8 467.3 270.7 173.0 100.9 544.5 CPC 13.5 - 5.9 19.4 - - - - 13.5 - 5.9 19.4 Diversified Industries - 75.0 79.4 154.4 247.7 1,863.8 81.2 2,192.7 247.7 1,938.8 160.6 2,347.1 ETFs - - - - 169.8 2.1 - 171.9 169.8 2.1 - 171.9 Financial Services - - 18.0 18.0 51.0 1,141.9 213.4 1,406.3 51.0 1,141.9 231.4 1,424.3 Forest Products - 15.6 0.2 15.7 - 60.0 - 60.0 - 75.6 0.2 75.7 Life Sciences - 31.3 18.8 50.0 - 179.4 83.7 263.1 - 210.6 102.5 313.1 Manufacturing - - 6.2 6.2 - - - - - - 6.2 6.2 Mining 27.7 215.3 1,331.1 1,574.1 165.0 2,226.2 2,280.1 4,671.3 192.7 2,441.5 3,611.2 6,245.5 Oil & Gas 66.5 276.5 716.6 1,059.6 1,415.0 1,616.2 260.8 3,292.1 1,481.5 1,892.7 977.5 4,351.7 Other - - 6.3 6.3 - - - - - - 6.3 6.3 Real Estate - 47.2 47.8 95.0 582.3 1,148.1 - 1,730.4 582.3 1,195.3 47.8 1,825.4 Structured Products - - - - 1,167.7 839.7 2.1 2,009.5 1,167.7 839.7 2.1 2,009.5 Technology 6.2 - 58.2 64.4 - 31.1 13.3 44.4 6.2 31.1 71.5 108.8 Utilities & Pipelines - - - - - 853.3 - 853.3 - 853.3 - 853.3
TOTAL 114.0 711.0 2,345.0 3,170.0 4,069.2 10,103.6 3,009.9 17,182.7 4,183.1 10,814.6 5,354.9 20,352.7
*includes supplementary & secondary offerings
As at May 31st, 2010 (Year-to-Date).; Source: the TMX Group
TSX Venture Exchange (C$ Millions) Toronto Stock Exchange (C$ Millions) TSXV and TSX (C$ Millions)
19
What's Financed on TSX and TSX Venture Exchange by HQ Location (May 31, 2010 YTD)
What's Financed on TSX and TSX Venture Exchange by HQ Location (May 31, 2010 YTD)
Equity Capital Markets: Financing Environment
Source: TMX Group
20
TSX Mining and Oil & Gas Equity Capital Markets
A record $22.2 billion was raised on TSX and TSX-V
by the listed mining companies in 2009
Mining Sector tops total equity capital raised in 2009
– C$3.0 Billion of equity capital raised in 2009 for
South American Mining Projects through 125
financings
Top performing index on TSX was S&P/TSX
Diversified Metals & Mining Index
Recent Colombian Mining/ O&G Financings Overall 2009 TSX/ TSX-V Financings
Recent Colombian Mining/ O&G Financings Overall 2009 TSX/ TSX-V Financings
Source: TMX Group/ Company Press Releases
Nov 2009: $103 Million – Marketed Private
Placement
Sep 2009: $12 Million – Marketed Private
Placement
Oct 2009: $40 Million – Bought Deal
Sept 2009: $63 Million – Mkt. Short Form
Prospectus
May 2010: $50 Million - Bought Deal
Pending: $50 Million – Marketed Private
Placement
21
Full Service Experience
IndependencePartnership
Independence
Partnership Model
Full Service
Experience
Strategic advice and sourcing of capital
unconstrained by ownership – no credit related or
principal trading conflicts
Founded, owned and operated by senior investment banking
professionals
Focused on corporate finance, mergers and acquisitions,
institutional sales and trading and equity research focused
on mining, oil & gas and diversified industries
Services delivered by senior investment banking
professionals who are leaders in the field and have extensively worked in their industries before banking
Independent Financial Advice and Capital Markets Resources/ Expertise Delivered by Seasoned Senior
Professionals
Independent Financial Advice and Capital Markets Resources/ Expertise Delivered by Seasoned Senior
Professionals
Jennings Capital Inc.: Key Principles
22
April 2009
$40,519,500
Agent
January 2009
$20,000,000
Underwriter
September 2009
$80,500,000
Lead Underwriter
Jennings Capital Inc.: Recent Mining Financings
In the last three years, Jennings Capital Inc. has advised in over 40 separate transactions and, in aggregate, managed the placement and after-market trading of approximately $6.0 billion in equity capital for over 70 of Canada’s most successful growth businesses
We have led or co-managed offerings ranging in size of up to $392 million
We have most recently financed gold and base metals projects from different jurisdictions such South America (Colombia, Peru), Canada, US, West Africa and Australia
Proven Success
September 2009
$50,000,000
Agent
April 2008
$80,000,000
Agent
March 2008
$40,000,000
Lead Agent
June 2007
$385,000,000
Agent
Mining Transactions
$104,250,000
May 2010
Lead Underwriter
$63,250,000
Lead Agent
September 2009
$10,400,000
December 2009
Lead Underwriter
23
David DonatoDavid DonatoDaryl J. Hodges – President & CEODaryl J. Hodges – President & CEO
Simion CandreaSimion Candrea
Co-founder of the Jennings’ Toronto operation and directly oversees the investment banking group
Over the last 11 years, carried out mining equity research and investment banking at Jennings Capital and at HSBC Securities including financings of $600K to $1.2 billion
Structured, arranged and led past financings totaling in excess of $2.5 billion
As a geologist, worked in the mining industry in Canada, Sweden, Finland, Russia and South-East Asia for over 18 years
Jennings Capital Inc.: Mining Investment Banking
More than 14 years experience in the financial services industry, including 9 years of investment banking experience
Former Head of Investment Banking at Loewen, Ondaatje, McCutcheon and 6 years experience in public accounting with Arthur Andersen and BDO Dunwoody
B.A. (Honours Chartered Accountancy Program) from the University of Waterloo, CA from the Institute of Chartered Accountants of Ontario and CFA charterholder
Joined Jennings in early 2005, as an Investment Banking Associate in our Toronto office
Primarily focused on the mining and special situations sectors
Prior to joining Jennings, five years with RBC Dominion Securities Inc. and the Dutch Bank ABN AMRO, covering the Healthcare/Pharmaceutical sector in the European Emerging Markets
Ricky ChanRicky Chan
Joined Jennings in January 2008 as an Investment Banking Associate at our Toronto office
Primarily focused on the potash/ fertilizer and special situations sectors
Prior to joining Jennings, six years in the financial services industry which includes Loewen, Ondaatje, McCutcheon and Deloitte Financial Institution Group
24
Peter CampbellPeter Campbell Mark TurnerMark Turner
Stuart McDougallStuart McDougall
Jennings Capital Inc.: Key People in Mining Research
Professional Mining Engineer with 25 years experience in the mining business with in-depth mining background
Formerly an exploration manager with Falconbridge Limited (now Xstrata) where he worked on various worldwide exploration projects involving exploration for Ni, Cu, and Cu-Zn deposits
Peter is a member of the PEO, CIM, PDAC, SEG and MRAG
Peter covers base metals, iron ore, and Canadian gold producers
Studied geology at the University of Toronto Joined Jennings in June 2006 with more than 10
years of mining industry experience, including 4 years as a reporter for the Northern Mines
A mining research associate with GMP Securities covering mining companies outside the conventional gold and base metals sectors
Stuart focuses on gold producers and developers, mainly in Africa and Latin America
Joined Jennings in February 2008 as an Associate covering the Mining sector
Prior to joining Jennings, Mark worked for Loewen, Ondaatje, McCutcheon Ltd. as a mining Research Associate
Worked for a large Canadian home developer, valuing land acquisitions and developing infrastructure projects
Holds a B.A.Sc. in Geological Engineering from the University of Waterloo and a MBA from the Richard Ivey School of Business at the University of Western Ontario
25
40 years investment and resource based experience in research, investment banking, corporate finance, joint ventures, mergers & acquisitions
Founded two successful investment banking firms - Carson Jennings & Associates and Jennings Capital Inc. and has headed the western Canadian investment banking divisions of two national firms - McLeod Young Weir and Midland Walwyn Capital Inc.
He has served and serves on numerous boards, including Western Financial Group and Investment Dealers Association (now IIROC)
David McGormanDavid McGormanRobert Jennings – Chairman Robert Jennings – Chairman
Liam BalfourLiam Balfour
Jennings Capital Inc.: Oil & Gas Investment Banking
Over 15 years of investment banking and corporate finance experience within the Canadian energy sector
Prior to joining Jennings, was head of Haywood Securities Inc.’s Calgary corporate finance department
Has advised clients on mergers and acquisitions with an aggregate transaction value of over $2 billion
Graduated with an Honours B.Sc. in Theoretical Physics from the University of Guelph and an M.B.A. from the Michael DeGroote School of Business
Has over nine years of experience in the oil and gas investment business encompassing both equity research and corporate finance
Recently has been focused on Jennings’ oil and gas merger and acquisition assignments, having advised on over $750 million of transactions since January 2003
CFA charterholder
Michael Shumlich Over six years of investment banking experience
in the oil and gas sector working on both domestic and international assignments
Two years of corporate development experience with Agrium Inc., an international fertilizer company
Holds a Bachelor of Commerce degree with Distinction, a Master of Science degree and is a CFA charterholder
26
Jennings Capital Inc.: Recent Oil & Gas Financings
We have financed oil and gas projects from different jurisdictions throughout the world including South America (Colombia, Guyana, Ecuador, Peru, Argentina and Brazil), Canada, China, Africa and the FSU
In addition, Jennings has carried out many advisory assignments for oil and gas located both domestically and internationally
Proven Success
Oil & Gas Transactions
$40,000,000
Pending
Agent
$63,400,000
Co-Lead
February 2010
$65,000,000
Pending
Agent
August 2009
$80,500,000
Agent
December 2009
$50,000,000
Advisor
May 2010
$3,400,000
Co-Lead
March 2010
USD$25,000,000
Co-Lead
May 2010
$23,500,000
Managing Dealer
27
David Ricciardi David Ricciardi
Gregory Chornoboy Gregory Chornoboy
Joined Jennings in 2005 and covers energy companies with international operations
Prior positions with Amoco Canada Petroleum, Saudi Aramco, and Ultramar Oil & Gas, as well as undertaking consulting assignments with various domestic Canadian energy companies
Entered the investment banking sector in 1993, as Vice President, Corporate Finance with FirstEnergy Capital.
Former director and Secretary of the Alberta Performing Arts Stabilization Fund
Prior to joining Jennings, David spent six years at Ross Smith Energy Group Limited, the last two years as Vice President of Finance
At Ross Smith David covered numerous exploration and production companies operating in Canada and the United States
Prior thereto, David spent over a year at Peters & Co. Limited as an analyst in the corporate finance department
Alange Energy Corp.
Canacol Energy Ltd.
Gran Tierra Energy Inc.
Alange Energy Corp.
Canacol Energy Ltd.
Gran Tierra Energy Inc.
Jennings: Colombian Research CoverageJennings: Colombian Research Coverage
Jennings Capital Inc.: Key People in O&G Research
Pacific Rubiales Energy
Petrominerales Ltd.
Suroco Energy Inc.
Pacific Rubiales Energy
Petrominerales Ltd.
Suroco Energy Inc.
28
Case Study: Greystar Resources Ltd. (GSL: TSX)
Market Statistics
Angostura Project
*As at June 16, 2010
**As at May 12, 2010
***As at March 31, 2010
Source: Greystar Resources Ltd., Bloomberg Financial Markets
Company Overview
Greystar Resources is a TSX and AIM-listed exploration and development company focused on developing its Angostura gold-silver project
Greystar's main asset is the 100%-owned Angostura gold-silver project located in northeastern Colombia
o 450 km north of the capital city of Bogota
o 55 km north east of the city of Bucaramanga
Greystar is headquartered in Vancouver, Canada with an operations office in Bucaramanga, Colombia
Feasibility study completed, DFS under way
Over 300,000 metres drilled
Current Gold Resource: 11.5 million oz Measured & Indicated, 3.5 million oz Inferred
Current Silver Resource: 61.0 million oz Measured & Indicated, 18.8 million oz Inferred
Exchange TSX & AIM
Symbol GSL
Share Price* C$5.02
Shares Outstanding** 84 mm
Market Capitalization** C$420 mm
Cash & Short-term Investments***
C$123 mm
29
0
2
4
6
8
10
J un-10Apr-10J an-10Nov-09Aug-09J un-09Apr-09J an-09Nov-08Aug-08J un-08
Vol
um
e (
million
s)
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
Pri
ce (
C$)
Volume Price
Early, Consistent & Solid Support Capital Markets Support
FINANCINGS:
Nov 2004: Jennings Capital leads C$21.7 MM equity financing
Sept 2009: Jennings Capital leads C$63.2 MM equity financing
RESEARCH & TRADING:
One of the first dealers to provide research early on
Consistent trading & after market support
FINANCINGS:
Nov 2004: Jennings Capital leads C$21.7 MM equity financing
Sept 2009: Jennings Capital leads C$63.2 MM equity financing
RESEARCH & TRADING:
One of the first dealers to provide research early on
Consistent trading & after market support
Source: Bloomberg Financial Markets
Case Study: Greystar Resources Ltd (GSL: TSX)
In late April, the Ministry of the Environment, Housing and Territorial Development (MAVDT) requested Greystar file a new Environmental Impact Assessment (EIA) in regard to the development of an open pit gold and silver mine at the Angostura Project in Colombia
April 23rd close: C$6.50
April 27th close: C$3.60 ~ C$245 MM in shld. value wiped
In late April, the Ministry of the Environment, Housing and Territorial Development (MAVDT) requested Greystar file a new Environmental Impact Assessment (EIA) in regard to the development of an open pit gold and silver mine at the Angostura Project in Colombia
April 23rd close: C$6.50
April 27th close: C$3.60 ~ C$245 MM in shld. value wiped
Dealer Analyst Recommendation Target Price
J ennings Capital McDougall Speculative Buy $7.75
RBC Capital Markets Curran Sector Perform $6.50
Octagon Capital Visagie Buy $8.60
Scotia Capital Turnbull Sector Perform $6.00
BMO Capital Markets Hayes Market Perform NA
Canaccord Genuity Campbell Speculative Buy $8.75
Loewen, Ondaatje, McCutcheon Fowler Speculative Buy $8.30
Current Analyst RecommendationsDealer Analyst Recommendation Target Price
J ennings Capital McDougall Speculative Buy $7.75
RBC Capital Markets Curran Sector Perform $6.50
Octagon Capital Visagie Buy $8.60
Scotia Capital Turnbull Sector Perform $6.00
BMO Capital Markets Hayes Market Perform NA
Canaccord Genuity Campbell Speculative Buy $8.75
Loewen, Ondaatje, McCutcheon Fowler Speculative Buy $8.30
Current Analyst Recommendations
30
Partners in GrowthDaryl Hodges (416) 304 2174
Simion Candrea (416) 304 2186
Ricky Chan (416) 304 3891
Mark Styles (416) 304 3892
Michelle Hung (416) 304 3893
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