Keith Neumeyer discusses the IPO of his new company, First Mining Finance (FF).
First Mining Finance has been designed to take advantage of the depressed markets for mining assets. Many see current valuations as the cheapest they have been in 20 years, on a relative basis perhaps even the cheapest ever. FF’s aim is to tap into its large knowledge base and use it to accumulate as many quality mining assets as possible (Americas only) - assets which don’t require higher metals prices to be viable - while they are cheap. Eventually, the plan is to have a large bank of them. When (if) the mining cycle turns favourable again, it is hoped the ‘mineral bank’ will have appreciated considerably in price. FF will then look to generate revenue either from re-sales, JVs, royalties or streaming structures.
The man behind the deal is Keith Neumeyer. For those of you that don’t know Keith, he built First Majestic Silver (TSX:FR) and took it from penny stock status to $25 a share (in the heady days of 2010-11) with a C$3 billion plus market cap. It is now one of North America’s leading silver producers and even in today’s beaten up silver market it remains profitable with a market cap of around C$900m and a share price of $7.50-$8. Keith was previously behind First Quantum Minerals (TSX:FM), which followed a similarly enormous trajectory to become one of the world’s biggest copper producers. His record in mining is pretty much second to none. It is better than even mine.
Also involved are many of the other key personnel from First Majestic, such as Ramon Davila and Raul Diaz.
FF already has 18 properties at various stages of development (gold, silver, copper, lead and zinc) and has raised C$2.7m. The company will IPO in Canada via an RTO next month and plans to raise another C$8-10m (at 40c) in the process. A C$10m raise would mean 80m shares outstanding a market cap of just above C$30m. Management will own about 10% and First Majestic shareholders 25-30%.
The success of First Mining Finance depends on the metals markets, of course, but the ideal situation would be for them to remain depressed for another while so that assets can be picked up cheaply and for things to then pick up, as they one day will. This is a company to hold for three to five years rather than flip.
Anyway, if you are interested in finding out more or in taking part in the IPO, please contact me and I’ll send over forms (email - frizzers at gmail dot com). If you want to speak to Keith, I’ll try and arrange that too.
edit - Further to your questions, I have had the following from management:
“Total management fees are around $500k per year, this includes the cost of support services from First Majestic (offices, legal, administrative etc). We have four employees. The total holding costs per year are around 900k so the total annual cash burn rate is expected to be $1.4 mn.
The minimum investment amount is $10,000.
Management currently owns (i.e. before this financing) 15% of the shares.
We are looking to close the financing within the next week or so ( i.e. by around March 6 or so) and we expect the shares to be listed by the middle of this month”.
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