Pala Investments An investment company focused on value creation in the metals and mining space
Who we are Pala is an investment company focused exclusively on the metals and mining sector, backed by a team of accomplished professionals and a track record of success. Mining sector expertise Track record of success ▪ ▪ Pala has a team of accomplished mining industry professionals drawn from Pala was founded in 2006 and, since inception, has invested in over 90 companies in 25 countries across six continents. around the world. ▪ ▪ The team includes specialists and technical experts with skills in finance, Pala works in partnership to unlock value by: law, consulting, mine engineering, mine planning, metallurgy and geology. ▪ Providing long-term capital for development, expansion and ▪ optimization. Pala uses this diversity of skills to help its partners create value throughout the mining life cycle, from project development and operational turnaround ▪ Providing capability in strategic and corporate development. through to operational management and M&A. ▪ Identifying M&A opportunities and assisting with transactions. ▪ Pala also invests in products, services and technology in the mining sector in ▪ Helping its partners augment their board and management team with both developed and emerging markets. high quality professionals, sourcing skills from its global network. ▪ Deep relationships in the mining, investment and advisory world allow Pala ▪ Planning and executing exits for the benefit of all stakeholders. to assist its partners in developing business connections, raising finance, delivering transactions and strengthening management. Mineral sands product storage – Sierra Rutile, portfolio investment With its experienced team of mining professionals and a strong track record of successful investments, Pala is an 1 ideal partner for mining companies looking to maximize shareholder value.
Where we invest Pala invests in development and production stage mining companies, as well as products and services that serve the mining sector, globally. Mining companies Mining products, services and technology ▪ ▪ We consider investments in mining companies where a value catalyst is In addition to primary mining investments, Pala also invests in products, projected within the short to medium term. services and technology for the mining sector. Producing assets – particularly those with expansion or optimization ▪ ▪ As investors in products, services and technology, we look for opportunities that offer the potential for: opportunities. ▪ Development stage companies – where cash flow generation is ▪ Organic growth, including geographic expansion and entry into new expected within a modest period of time. markets. ▪ Turnaround situations – with troubled, under-appreciated or over- ▪ Development of new or disruptive products and technologies. looked businesses looking to realize their potential. ▪ Growth through M&A. ▪ Pala invests in all commodities and all geographies where value-creation opportunities exist. Specialist underground mine services – Dumas, portfolio investment Pala is focused on opportunities where it can work with its partners to realize value accretion within two years 2 from initial investment.
How we invest Pala is flexible in its approach, investing in equity, debt structures, convertibles, and product streams, globally. Equity Debt structures and product streams ▪ ▪ Pala mainly invests in equity, and generally looks for control positions, either Pala invests in a variety of debt structures, including mezzanine instruments, convertibles and debt & warrant packages. alone or with like-minded co-investors. ▪ ▪ In equity situations, Pala's partners maximize their leverage to Pala's Such structures are attractive to companies with high-risk, high-reward strengths. projects where conventional equity or debt markets are difficult to access. ▪ Pala’s partners can make use of Pala’s team of professionals on a ▪ range of value-creative projects. Pala is able to be flexible and innovative with the terms of its debt investments, allowing growth projects to be developed and ▪ Pala’s partners can take comfort in Pala’s long -term, fundamentals- optimizations to be implemented, even when economic conditions are based approach to equity investing. unfavorable. ▪ To fully align interests with management teams, Pala looks to incentivize ▪ Pala also invests in royalties and product streams. with rewards strongly levered to performance, including shareholder returns. ▪ Pala provides financing packages linked to future product streams ▪ Pala can deploy equity capital in a wide range of structures, including: from development projects. ▪ Block sales & capital raises. ▪ Pala is also able to acquire existing product streams from producing ▪ Buyouts and tender offers. operations, allowing companies to monetize future cash flows. ▪ Restructurings. ▪ Such transactions provide alternative financing routes to dilutive equity issuances or difficult-to-service debt. ▪ Asset disposals and JVs. ▪ Streaming deals can be highly value-accretive for companies, ▪ Warrants and options. particularly in markets when share prices are weak. Liquid portfolio ▪ In addition to strategic equity, debt, and product streams investments, Pala also has a portfolio of liquid positions. ▪ This liquid portfolio comprises investments in commodities, currencies, equities, fixed income, and derivative structures. ▪ The portfolio allows Pala to hedge its strategic investments, as well as actively trade, according to macro trends affecting the mining world. Pala can invest in a range of structures, in both public and private companies, and across both developed and 3 emerging markets.
Track Record A strong track record of forming partnerships with management teams, boards and shareholders to create long-term value 4
Track record – Advancing mining assets Pala has a strong track record of advancing its mining investments through development into production and expansion. Pre-feasibility Definitive Preliminary Construction Production Expansion study feasibility study economic assessment Exit Lanti Dry Mining Oct 2011 Exit Gangama Dry Mining Oct 2011 Present Pumpkin Hollow Mar 2010 Present Ban Phuc May 2012 Present Çöpler Apr 2007 Present Lance Dec 2010 Present Achmmach Dec 2016 5
Case study – Executing a turnaround Our long-term investment horizon enables us to look through near-term challenges, and instead focus on fundamental value. This philosophy was a key component of Sierra Rutile’s successful turnaround and exit to market leader, Iluka Resources. History Value creation through partnership with Pala ▪ Pala acquired a 30% stake in Sierra Rutile (“SRL”), the Sierra Leonean Pala, in collaboration with Sierra Rutile’s employees, shareholders and other mineral sands producer, in September 2010 and subsequently increased its stakeholders, was successful in implementing the following: holding to over 50%. ▪ Strategic business plans – Execution of a strategic business plan, ▪ When Pala first invested, SRL had suffered a series of setbacks: repositioning SRL operations from a capital-intensive dredging operation, to a more flexible dry mining business focused on cash generation across the ▪ Its share price had been languishing near all-time lows for an extended commodity cycle. period. ▪ Investments and expansion projects – Focused investment in process ▪ The company was involved in a dispute with the Government of Sierra optimisation and operational efficiency, as well as the successful Leone regarding an outstanding government loan. construction and commissioning of expansion projects; the Lanti Dry Mine ▪ Its assets had been chronically neglected of investment and in 2013 and the Gangama Dry Mine in 2016. maintenance, and the company was loss-making. ▪ Production growth – SRL’s rutile production increased from 68,000 tpa in 2010 to a record run-rate production of 172,000 tpa in Q3 2016, making SRL the world’s largest producer of natural rutile. Turnaround of dredge mining operations – Sierra Rutile ▪ Stakeholder relations – Re-establishment of a positive and cooperative relationship with the Government of Sierra Leone, including repayment of its loan, and enhanced focus on community, including environmental, infrastructure, educational and healthcare projects. Successful exit to market leader, Iluka Resources ▪ In December 2016, Pala completed the sale of its 53% interest in SRL to a leader in the mineral sands industry, Iluka Resources. ▪ The transaction valued SRL at £215 million. During its partnership with Pala, Sierra Rutile was transformed from a loss-making company to a business that 6 has generated EBITDA in excess of US$100 million p.a., and became the world’s largest producer of natural rutile
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