RCF VII Exit Update: Cuprous Capital Ltd.

Hear Jacqui Murray, Partner, discuss RCF VII’s recent exit from Cuprous Capital Ltd

RCF Private Equity

Jacqui Murray, Partner, provides an exit overview of what may become a globally significant copper producer over the next 20+ years.

Hi, I’m Jacqui Murray, partner at Resource Capital Funds. RCF VII just completed the full exit of our investment in Cuprous Capital Ltd. Cuprous owns 100% of the Khoemecau Copper project in Botswana and we just completed the sale to MMD, A Hong Kong listed company. The full transaction value, with equity and some adjustments at closing, required funding of over $2 billion from MNG, so it’s a very material transaction for copper in mining and we’re very excited to see it closed.

RCF has seven offices globally and that allows us to source a lot of our transactions off market. In this particular instance, we had been introduced to the project in a previous process and chosen not to invest that time around. Following some further technical work from the company, we saw a lot more opportunity and chose to invest at the stage where this was fully financed, fully permitted and we were the last equity in just prior to construction.

A key part of our investment thesis for this transaction was that it was copper. RCF takes a macro view of all the commodities and they’re not all the same. We do look very specifically at each one and have our view on macro demand. But also, through our insights from looking at a lot of projects throughout the world, we have a very good perspective on the supply side of that equation.

For Khoemecau, we had a very strong view on the fundamentals on copper going forward and we still do today. And so that formed a big part of our investment for this deal. The key attractiveness of this investment was that it was a fantastic resource in a good mining jurisdiction. In terms of the resource, this is a globally significant copper or body that can support a mine life of more than 20 years. In terms of Botswana, what makes a good money jurisdiction? It is about good property security, good stable politics, mining law, the ability to repatriate funds easily, and in this particular instance, one thing that’s quite attractive is its proximity to South Africa. With a very strong mining history, which means there is access to quality people’s services and support.

Another important aspect of this transaction, and really for every deal that we do, is the quality of the management team and the other stakeholders that are there with us in the deal. For this one, we had really aligned debt holders, streamers, and other shareholders that had the same investment thesis and view on where we were going over the course of our ownership. And in the case of the management team, they were incentivized quite strongly and aligned to a great outcome for us as shareholders.

For the private equity strategy at RCF, we group investments into two buckets, what we call value and growth. Value transactions tend to most often be operating companies that need an injection of capital and support to realize value. And that could be through an M&A transaction creating synergies, it could be solving a distressed issue, or it could be funding an expansion.

The other area of investment is in growth deals and growth is supporting our company to advance through its development phases. And most typically in the private equity strategy, we are putting our capital into the construction equity to take a project from that project stage to become an operating mine.

In the case of our investment in Cuprous, it was a growth deal and our money was put in last as the last equity to take it through to operations. Part of the focus of this investment was to increase the reporting standards around ESG. The team were doing great work on the ground, but it needed an uplift in the reporting. And what that really meant is that we could see the good work, as shareholders, that was being done on our behalf. And it certainly made the process for an incoming buyer a lot easier when that data was readily available. And ESG is critical to mining and we’ve moved beyond just the traditional focus on risk management and are now looking more at the value add that can come from focusing on ESG in our mining investments. And really mining is critical to the world if we want to achieve our goals for energy transition, we need mining.

What’s discussed: 

  • Exit transaction and overview
  • The Khoemecau Copper Mine project in Botswana
  • RCF VII Investment thesis and value add
  • Overview of RCF’s growth and value strategy

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