Download - SRLC AGM 2010
-
8/6/2019 SRLC AGM 2010
1/14
Annual General Meeting | May 11 th 2011
-
8/6/2019 SRLC AGM 2010
2/14
Forward looking Information
2
This investor presentation includes certain forward looking information reflecting prospective managementscurrent expectations regarding the target amount, purpose and returns of bridge and mezzanine resourcelending, the targeted gross yield and book value, the potential valuation for Sprott Resource Lending Corp.
(SRLC) and the establishment of an annual dividend and a normal course issuer bid for SRLC. Generally,forward looking information can be identified by the use of forward looking terminology such as plans,expects, target, estimate, forecast, intends, anticipates or variations of such words and phrases orstatements that certain actions, events or results may, would, might, or will be taken, occur or beachieved. This forward looking information reflects managements current expectations and assumptionsincluding, but not limited to, the ability of the companies invested in to achieve their objectives; difficulty in
obtaining financing or raising capital; the level and volatility of prevailing interest rates and credit spreads;potential price to book value ranges; adverse developments in the availability of desirable loan and investmentopportunities whether they are due to competition, regulation or otherwise; a compression of the yield on theinvestments; SRLCs regulatory and tax structure; the adequacy of SRLCs cash resources and working capital;and the timing of cash flows, if any. This forward looking information is not a guarantee of future performanceand is subject to a number of risk factors, including, but not limited to, changes in interest rates that affect costof capital; operating in a highly competitive market for investment opportunities; lack of liquidity in theinvestments; and changes in the laws or regulations that govern SRLCs business. Actual results may differmaterially from information contained in the forward looking information as a result of one or more of theaforementioned risk factors. Accordingly, you should not place undue reliance on the forward lookinginformation contained herein. SRLC undertakes no obligation to publicly update or revise any forward looking
information contained herein, except as required by applicable laws, rules and regulations.
2
-
8/6/2019 SRLC AGM 2010
3/14
The Opportunity
3
The natural resource industry is a large market comprised of companies that require continuous development and investment.
Sprott Resource Lending (SRL) aims to become the leading mezzanine lender to the sector.
Banks have become more risk adverse, with high associated costs of hedging, approvals and reporting.
SRL partners with resource entrepreneurs to provide timely, flexible,customized financing solutions.
SRLs flexibility allows participation in unconventional financings.
-
8/6/2019 SRLC AGM 2010
4/14
Sprott Resource Lending Summary
4
Market capitalization of ~$263 million Listed on TSX (SIL) and Amex (SILU)
Resource Loan portfolio
Closed and pending: 6 companies, $86 million Initial Target: 20 25 transactions, $250 million Long Term Target: 50+ transactions, $1 billion
Sources of income Cash interest stability of revenue Shares and warrants potential for upside
-
8/6/2019 SRLC AGM 2010
5/14
Various Financing Solutions
5
Bridge Loans
Precious Metal Loans
Acquisition Financing
Project Financing
Convertible Debt
Combinations of Debt and Equity Financing
Debt Markets are becoming more integrated. SRLC will considerbroadening our platform where appropriate
-
8/6/2019 SRLC AGM 2010
6/14
Origination Capabilities
Origination has historically been the primary challenge for specialty lenders to the sector
SRLC is positioned to benefit from: Active resource markets Relationship network of SRLC shareholders:
Sprott, Dundee, Global Resource Investments When combined, believed to be largest global exposure to junior
resource sector Large network of financial industry connections
Screening, due diligence and underwriting funnel has traditional metrics: >100 opportunities investigated >30 formal term sheets issued 6 investments made and pending
6
-
8/6/2019 SRLC AGM 2010
7/14
Experienced multi disciplinary team at SRLC for independent assessment and monitoring
Credit Process
Experienced professionals form old Quest organization, within SRLC, Sprott Inc., Board of Directors, and major shareholders allows SRLC to:
At Origination At Loan Maturity
Assess the quality and the desirability of borrower
assets/security on an independent basis
Assess the strengthof management
Select opportunities with greatest upside potential while satisfying allcredit qualifications
Explore natural avenues for loan takeout through
more permanent financing, if required
Source buyers if borrower or asset is distressed
During Term
Ongoing assessment of borrower performance
Ongoing monitoring of market conditions
7
-
8/6/2019 SRLC AGM 2010
8/14
Industry Update
Equity market strength continues to dampen origination activity
Pipeline of deals is still strong 6 deals, representing deployable capital of $90MM plus, currently in
negotiation
Signs of commodity fatigue lead management to be careful in deploying capital too quickly
Relationship building is paramount and our main focus Will focus on building energy exposure (Calgary, Houston,
international) over next 6 12 months
8
-
8/6/2019 SRLC AGM 2010
9/14
Executed Mandates
9
African Minerals
US$417,700,000Two Year Secured
Loan Facility
Mandalay Resources
C$10,000,000Two Year Secured
Loan Facility
Timmins Gold
C$18,000,00014 Month Secured
Loan
Facility
Ram Power
US$50,000,000Two Year Secured
Loan Facility
-
8/6/2019 SRLC AGM 2010
10/14
Resource Loan Position
As at: April 30, 2011
1010
Amount Deployed
Funded Resource Bridge LoansFunds for use in completing projects $45 MM
Expected To Close $41MM
Significant Amount of Capital Remaining to be Deployed (Cash + Real Estate Portfolio)
$202 MM
-
8/6/2019 SRLC AGM 2010
11/14
Real Estate Loan Book Update
Cash position amounts to $114 MM (April 8, 2011)
Management anticipates that successful monetization of real estate loans
will be substantially complete by Q2 2011 dovetails with resource book build
April 8, 2011* Real estate portfolio of $87 MM (Loans $57MM, Foreclosed
Properties
$30MM)
broken
down
as
follows: $24MM to $31MM expected to be monetized by Q2 2011 in the regular
course $55MM to $62MM are more unique but bid levels/interest are
increasing Quicker repayment options exist depending on resource loan demand
11* Note: Amount calculated using December 31, 2010 loan loss allowance
-
8/6/2019 SRLC AGM 2010
12/14
Peter Grosskopf President & CEO
Jim GrosdanisChief Financial Officer
Also CEO, Sprott Inc. and President Sprott Consulting LP as of September 7, 2010 Formerly President, Cormark Securities Inc. and co founder of Newcrest Capital Inc.
Former founding member of Dundee Bank of Canada as Vice President of Operations
SRLC has an experienced and proven executive team
Management Team
1212
Formerly Senior Vice President of Asset Management for Quest Capital Corp., CFO and Treasurer of Quest Capital Corp. Narinder
NagraChief Operating Officer
Chartered Accountant and former Director of Finance of a division of Magna International and Coca Cola Ltd.
Kent WilliamsVice President, Finance
Former Vice President, Asset Based Lending at Royal Bank of Canada. Former Analyst (Mining & Credit), Polar Securities.
Andrew SteuterVice President,
Origination
-
8/6/2019 SRLC AGM 2010
13/14
Murray Sinclair,Chairman
Chairman of SRLC. Current Director, Sprott Resource Corp.
Serves
as
advisor
to
SRLC
for
origination
and
remediation
President & CEO
Vice Chairman of Spur Ventures Inc., Director of Tasman Metals Ltd. and Hansa Resources Limited
Former President & CEO SRLC. Serves as advisor to SRLC for origination and remediation
Retired Partner, DuMoulin Black LLP
Chief Investment Strategist and Portfolio Manager, Sprott Asset Management
President and CEO of Dundee Resources Limited
Retired
Partner
KPMG
President of the Crerar Group of Companies
Executive Chairman of Allied Nevada Gold
Board of Directors for the AGM
1313
Peter Grosskopf
Robert G. Atkinson
Brian Bayley
W. David Black
John Embry
Murray John
Dale Peniuk
Stewart J.L. Robertson
Robert M. Buchan (Proposed)
-
8/6/2019 SRLC AGM 2010
14/14
SRLC Target Metrics
Pay initial dividend by the second half of 2011
Defend net asset value through normal course issuer bid
Increase dividend yield to higher yield range Once capital is fully engaged in resource lending
Target
up
to
net
10
percent
annual
cash
returns Investigate options to maintain tax free status beyond existing
tax pools
14