Anglo digs out £100m war chest to fund new mining projects

MINE investor Anglo Pacific is on the hunt for new projects, with a war chest of £100m to spend amid what it claims is a shortage of backing for the industry.

Julian Treger, chief executive, said the sector was suffering from a “constriction of capital” and his firm stood ready to back projects that are struggling to get off the ground.

“The cost of capital is going up and there is a shortage of capital,” he said.

“We’ve got £100m of firepower and we’re generating quite a lot of cash – we’d like to deploy this.”

Mr Treger said that the industry had been hit by waning interest, with investors distracted by other opportunities such as Bitcoin and stocks in cannabis.

Environmental concerns were also deterring investors who need to follow ESG (environmental, social and governance) rules in their funds, he added, while the major miners’ reluctance to fund new projects signalled a lack of “faith” in the wider industry.

“Lack of investment is setting the sector up for a tremendous supply shock at some stage,” Mr Treger said.

‘Unlike sexier sectors mining is a beneficiary of technological disruption like electric vehicles’

“Unlike sexier sectors the mining sector is a beneficiary of technological disruption like electric vehicles.”

London-listed Anglo Pacific does not operate mines but instead makes money by financing companies and taking a cut of their turnover in return.

This “streaming” model is used by a number of companies in the Canadian market but is relatively unknown in London. Anglo owns royalties on iron ore, coal and vanadium mines.

It is targeting investments in base materials, rare earth elements and strategic minerals that it believes could be in strong demand for industries producing smartphones and electric cars.

Its biggest investors include Aberforth, Schroders and Blackrock.

Last week Anglo posted a 64pc jump in royalty revenue for the first half of the year thanks to higher production at some of the mines where it is invested.

It has a market value of around £340m, with its shares having risen 30pc this year.

“We had a very strong start to the year, unlike much of the mining sector, which is challenged,” Mr Treger said.

“We are confident about making further acquisitions in the coming months.”