Digging Deeper: Why Goldlogic is a Logical Step For Mining’s Financial Challenges
19 de dic de 2023
The New Testament’s Parable of the Talents tells us of a master who, when departing for a long journey, entrusts his prized treasures to three of his servants: the first receives five talents, the second two, and the third one. The first two immediately put the talents they were entrusted with to work, investing them as best they could. In the end, they double their investments.
For Sun Valley Investment, refinancing works the same way as the first two servants put the talents they were entrusted with to work.
After all, mining is a challenging industry, as is challenging financing such capital-intensive operations. This is why solutions such as refinancing have emerged, leveraging the mining resources to obtain better conditions for mining projects.
Goldlogic is Sun Valley Investments’ response to this challenge.
The industry has found financial ground in traditional methods such as loans, equity financing, and standard royalty agreements. Although these have proven useful over time, they come with their own stumbling blocks: risk of equity dilution, fluctuations in interest rates contrary to precious metals’ price moves, and potential undervaluation of assets, among others. Which often limits a company’s operational flexibility and rapid growth - as well as profits for the project investors.
Goldlogic turns the table in the industry’s favor. It puts the entirety of Sun Valley Investments' capabilities to work. It leverages the full capacity of our network of industry experts, and the savviness of our leading boarding team to find and work the best deals for financing promising projects.
The Goldlogic Refinancing Model
Goldlogic provides cash for investment, working capital, exploration, expansion, debt repayment, etc. In exchange for Long-Term Contracts Offer Greater Investment Certainty in a Tax Efficient environment.
This is executed by a financing model based on refining services. Either by providing these services by SVI portfolio refiners, or by our network of strategic LBMA gold refining partnerships, Goldlogic is able to provide a positive-sum proposal. The financed project gets a steady client, and Goldlogic is able to manage a competitive price for the precious metals.
But there’s more to it. The value proposition includes logistics solutions and hedging options, thus covering a broad spectrum of industry needs in a single, predictable, and long-term deal.
For the miner, such a proposal presents even more advantages. First and foremost, it’s a non-dilutive financing solution, as the equity remains unaltered. Second, this financing model behaves closer to a derivative or contingent liability than traditional credit solutions, thus benefiting the miner’s balance sheet.
By being a win-win situation, where the mining operation gets its required funding and the financier access to precious metals in advantageous conditions, the refinancing model proposed by Goldlogic creates a relationship of a symbiotic nature. Both parties are provided with an invaluable commodity in any business: predictability and stability. Such foresight enables more accurate financing planning, shielding the companies from volatile market conditions, where both reap mutual benefits.
Goldlogic: A Lever To Grow The Talents
Goldlogic can offer this because it is part of a larger whole: the Sun Valley Investment ecosystem. With global reach and active market participation in various continents, both in developing and developed markets, Sun Valley is experienced in working with the most demanding conditions and complying with different jurisdictions. Apart from its own network of precious metal operators, Sun Valley Investments also provides access to its large network of strategic partners among industry leaders, particularly within the London Bullion Market Association.
Now, getting back to where we started and the Parable of the Talents: do you remember what happened to the third servant? The one that was given one talent? He dug it in the ground, out of fear of losing it and enraging his master. But what has he achieved with this non-productive approach? He was banished by the master for his lack of diligence, and his talent added to the ten talents already managed by the first servant, “for those who have will be given more, and they will have in abundance”.
Sun Valley Investment has it. It has the experience, the human talent, the operators, and the presence throughout the world. It is a global partner spanning all fields of the precious mining industry. And it is prepared, through Goldlogic, to make proactive use of its talents, both human and financial, to help the best mining projects flourish and unground the shiny wonders lying beneath.
About Sun Valley
Sun Valley is a private equity firm focused on the precious metals industry with portfolio companies and branch offices in the Americas, Europe, and Asia. Sun Valley seeks to invest in sustainable development projects and operations with growth potential, low cash costs of production, or operating flexibility to insulate against volatility in the commodity markets.
The information contained or referenced herein is for information purposes only to provide the views of Sun Valley and the matters which Sun Valley believes to be of concern to shareholders described herein. The information is not tailored to specific investment objectives, the financial situations, suitability, or particular need of any specific person(s) who may receive the information, and should not be taken as advice in considering the merits of any investment decision. The views expressed herein represent the views and opinions of Sun Valley, whose opinions may change at any time and are based on analyses of Sun Valley and its advisors.
Partner / VP Business Development