Our primary role is to finance SMEs, who are exploring or already processing minerals. Many of these family-owned enterprises lack revenue so we can help them build up their liquidity and advise them on how to expand capacity. The majority of our loans range between US$5-10 million. We make sure that small miners comply with all the national and international standards when it comes to sustainability, taxation and information disclosure. FIFOMI is the only institution in Mexico to offer this kind of service to small and medium-sized miners. Our long-term goal is to encourage medium-sized mining companies in Mexico to obtain funds from the capital markets. We are already in discussions with the BMV to see how we can facilitate the entry of mining companies onto the stock exchange to raise capital - it is the most efficient form of achieving sustainable growth.

Larger companies have much more resources so they can recruit consultants and they can afford to make mistakes. On the other hand, the juniors have a much smaller budget so have much less room for error. Right now, to minimize the risk, junior companies are beginning to look to middle-man companies like SoftLanding Group, Export Development Canada or the Canadian Institute of Mining to seek advice that will soften the cultural blow. These companies learn from local knowledge and prepare Canadian companies for entry into Mexico. This applies especially now because in 2011, even junior companies could afford to make mistakes, whereas now cash flows are restricted and every penny counts.

Specialized mining funds exist that focus on projects requiring US$50-100 million of investment. FIFOMI’s line of credit extends to MX$3 billion but these amounts are a drop in the ocean compared to the type of money mining companies deal with. Other development banks like Bancomext and Nafinsa have much deeper pockets and are capable of lending much more, and I think these options should be explored for the Mexican mining industry. The creation of a new stock exchange in Mexico is currently in the pipeline and it should be opened in the near future. In an ideal scenario, this would incentivize new kinds of investment and remove the monopoly of the BMV in Mexico, creating a healthier, more competitive market.

In Mexico, exploration is controlled by the large companies with scalable budgets and mostly they reap the rewards. But Mexico is a huge jurisdiction and even the big three Mexican mining companies cannot cover all the opportunities by themselves, which is why there has been such a strong influx of Canadian companies into the market in the past 10 years. In my opinion, the Mexican institutional and retail investor community deserves to have exposure to local mining projects. The Mexican government has already done a good job in providing a working regulatory framework to promote and develop mining projects. Providing an efficient public capital raising framework seems like the logical next step.

When we are looking to acquire new concessions, we are running into significant problems with the process of application, granting and cancellation of mining concessions by the government. The delays related to the land concessions may mean Mexico could miss out on opportunities to generate wealth for the country and it could result in several years without investment. Out of 2,000 showings, only one becomes a mine. This means there are huge swathes of the country that are not being tested or utilized and because claim applications are not being granted, the government is missing out on taxes. This has a huge trickle-down impact because without access to this land, no new discoveries can be made and no new mines can come into production. This impacts not only the mining sector but the economy as a whole due to the industry’s role as an employment creator.

Sometimes it can be challenging to do business for companies other than the big Mexican operators, and issues such as land ownership can become complicated and drawn-out. We have a number of projects that we would like to develop but we cannot get a ruling on land ownership. But this is a very minor criticism. Mexico is more modernized than other jurisdictions like Peru so for North American companies it is easier to do business and I believe that Mexico is in the top five mining jurisdictions in the world. We have not had any security issues, and we have always had strong support from the local authorities. We are happy with Mexico as a jurisdiction and we want to grow our business.

Many small and medium-sized mining companies in Mexico often lack access to the products that can improve the efficiency of their operations. In some cases, these are family-run operations, and EDC can assist them to pinpoint where their operations can be improved and then put them in touch with the suppliers that can make a real difference to efficiency and profit margins. We want to connect Mexican miners with Canadian suppliers, so our efforts are focused on first establishing financial relationships with Mexican miners. On the basis of that relationship, we learn about the investment plans of each particular project and then connect them with the right Canadian supplier that can add value to the mining operation.