Consolidating Mexico’s Mining ProjectsMon, 10/21/2013 - 14:26
Q: What are the advantages that Mexico’s business environment provides to mining companies?
A: First of all, we have a very mature legal framework that allows private participants to work alongside the public sector in mining. In mining, private corporations can have up to 100% foreign investment and can hold 100% of the concession rights. Those concession rights can be sold onwards and can be returned to the government, without any kind of penalties whatsoever. They can alternatively be kept for 50 years, as long as the owners comply with all of the obligations that come with the concession title. Another crucial matter that benefits Mexico is our mature business environment for mining. In Mexico you can find drillers, geologists, engineers, and suppliers of all kinds. In certain areas there are some infrastructure constraints, but on the whole Mexico has made a huge effort to improve the available infrastructure, not only for mining but for all of the industries. Also, we have very open competition between Mexican private conglomerates and powerful foreign companies. The fact that companies can buy, reduce, increase, exchange, donate or even inherit concessions, allows this sector to be very dynamic and attractive.
Q: What opportunities did Candiani Mining detect in the mining industry?
A: Candiani Mining is a brand new initiative in Mexico. We decided that we wanted to facilitate mergers and acquisitions; we wanted to help corporations release and transact their non-core assets using our boutique firm. We have helped companies to fulfill exploration contracts with the option of purchase, which are quite common these days, and we have been significantly successful in finding counterparts for those projects. We started by simply delivering this type of service to the big conglomerates, but as time passed we saw the opportunity to do the same thing with what we call independent clients. Independent clients are all those people who for whatever reason are holding a mining claim, and either want to enter into a joint venture with a capital partner or sell their concession. Either way, we can help our customers to find the best buyer in the world for their assets. The idea is to promote that property on their behalf, and to make a beneficial transaction with a junior exploration company.
Q: What are the current needs of mining companies in terms of transactional advisory services?
A: When clients approach a firm like ours, the things they want to know is the value of their property and how they can find someone who is willing to invest in it. We normally hold a selling mandate or a buying mandate, depending on the transaction our client is willing to do. We give an opinion on the transaction for each particular asset, we discuss the value range and then we start approaching potential partners all over the world. Depending on the geology of the project and the stage of development, we know who might be interested in acquiring such a project, and we then facilitate the assessment and evaluation of the property, in order to try and put an agreement into place. Once we are successful, in terms of putting the right transaction for the right project into place, we provide a guardianship over that transaction. Normally purchase agreements can last from three to five years depending on the property, so we are responsible for keeping those contracts in good shape and making sure that both parties are honoring their obligations.
Q: What are the unique capabilities of Candiani Mining in assessing opportunities, promoting projects, and structuring risk-balanced mining transactions?
A: What has given us a very strong competitive advantage is that we understand the cultural basis of each of the parties. We understand how Canadian, American, and Australian companies think and what they are looking for, but we also understand the Mexican business culture. In most of the transactions we have closed, half of the battle was to decode the two-part logic and be sure that they could both be combined and satisfied in one transaction. This is extremely important because often transactions fail as a result of two ideologies that are not compatible.
Q: What is Candiani Mining’s committment to strengthening the Mexican mining sector?
A: We believe that we strengthen the Mexican mining industry every single time that we put a transaction into place. Where we make these kinds of agreements, money will flow into the projects and therefore into people’s pockets. If you have a project that is receiving investment on the ground then you are doing something positive for the country.