Diversification for Outsized Returns, Attracting Capital

Q: Haywood Securities has enjoyed substantial growth since 2015. What was the main driver behind this success?
A: Haywood Securities is the dominant investment firm in the energy and mining sectors in Canada. During the tough years in the mining sector, many of our assets declined. In the last couple of years, the company underwent a diversification process into other emerging sectors, such as blockchain and cannabis, which resulted in some outsized returns. For instance, there have been inflows related to the Canadian cannabis sector because American investors were unable to sell cannabis equities via US brokers and as a result, were required to open accounts at Haywood Securities. The company has played a key role in attracting capital because we are one of the leading brokers in this segment. Additionally, as mining equities have recovered, the overall assets under our management have also improved. Within the mining sector, we focus on junior companies where people are the most important factor. Having strong management is critical because it relates to having fresh ideas like looking for new discoveries on the exploration side.
Q: What projects in your portfolio best illustrate the company’s vision?
A: Minera Alamos is a good example of a company that we work closely with. Last year, the company signed an agreement with Corex Gold to develop the Santana project located in Sinaloa. Historically, that area has only been explored for near-surface oxide caps for heap leaching down to 50m. In partnership with Osisko Gold Royalties, another great geologist was put in place to complement the great team that Minera Alamos already had. They looked to the sulfides below the oxide and realized there was a permeable material, opening the possibility to execute a leaching process. By throwing sulfide materials on the leach pad, the recovery rate results were very similar to those performed with the oxide material. This was a game-changing strategy because drilling activities stopped while the company was still hitting gold as a transition into sulfide material. Now the company is drilling deeper and looking at the sulfides to heap leach, too. Minera Alamos just raised another CA$5 million and it will start drilling aggressively to move faster toward production while working with a much bigger resource target by heap-leaching material that everyone thought should be milled and crushed.  
Q: How would you rate the country’s attractiveness for exploration investment?
A: There are probably two main areas of concern from the investing side. The first is security. Torex Gold was a high-profile target working in places like Guerrero, although many of these issues have been mitigated to some degree. Second, after the elections, there remains some uncertainty regarding the new administration’s approach to managing potential tax changes. Many industry stakeholders are waiting to see how this issue unfolds. If there is a positive landscape in the coming months, I think more institutional investors will come and look for opportunities in Mexico. Globally, junior mining is challenging for institutional money. Removing uncertainty will make it easier to make investment decisions.
Q: What is Haywood Securities doing differently to stay ahead of its competitors?
A: Technical due diligence is key within our operations. The company addresses this issue at a higher level than our peers. For instance, our research team is very prepared because it is composed of professionals with a strong academic background. In addition, the close relationships we build with our clients are crucial. Our coordination with the sales desk, investment banking, research and trading institutions help us get to know every aspect of their activities as well as their main focus. During tough financial times, this becomes a great advantage because we are the company that fights to raise those extra dollars when nobody else can do it.  Additionally, as our peers go after bigger companies, they cannot deliver the focus required in a difficult market. Raising money and offering proper advice to smaller companies by customizing our services is what is allowing Haywood Securities to grow in the right direction and help our clients succeed.