It is difficult to imagine how Jeff Easton and Phil Valliere, the joint managing directors of midtown Manhattan investment group, the Lind Partners came to build a global mining exposure, starting with an Australian, Canadian and UK focus before adding the US to the mix. Sitting in their office surrounded by the Chrysler Building, Grand Central Station and the original New York Public Library, Kalgoorlie doesn’t immediately spring to mind as an investment starting point.
But, in keeping with Lucky Starr's classic "I've Been Everywhere", it is apparent that Easton and Valliere are not shy about jumping on an airplane to investigate any opportunities that might come to their attention.
Easton said: "It's true that we travel extensively. We stopped counting after we each racked up a million miles. But we think it's an intrinsic part of the evaluation process and it works for us."
It includes at least one trip a year of two-to-three weeks in Australia where they start in Perth, head to the east coast to tick off Melbourne and Sydney and finish in Brisbane sometimes with stops in between. In addition, Lind hosts a steady stream of mining companies coming to meet at its New York office year round.
Valliere said: "Almost all of our decisions are made on the basis of personal contact either by us reaching out to companies or them coming to us. The word of mouth concept, in both directions, has been a strong source of introductions."
Easton attributes its Australian exposure, as much as 50% of Lind's mining investments, to timing and the deep relationships it has developed over time.
"Our timing was very good. The mining boom had just started and was picking up momentum. It was a very robust environment."
Valliere added: "We just clicked with a lot of the people we met and have developed the utmost respect for the miners and operators in the space. Being entrepreneurs ourselves we loved the passion, the stories and the risk-taking attitude of the Australians.It's in their DNA."
This has carried over to Canada, into the UK and, with Lind's newest fund launch, the addition of US-listed companies to the mix.
"We know when our investment structure is the right fit so we can be a supportive capital partner and help companies make sure that they are in a position to bring home the milestones"
A good part of the expertise it has developed in the Canadian market has also come through a decision to be on the ground and get to know the companies in person.
Valliere said: "We are happy to support the industry and the platforms that promote it. We have been a premium sponsor of PDAC for the last three years and have also been a long-term sponsor of Vertical Event's RIU Conference series in Australia."
The expansion of its geographical reach has also extended to diversifying its sector exposure.
While mining remains the focus with 60-70% of its portfolio in the sector, Lind has investments in sectors including technology, biotech/healthcare and energy.
A measure of Lind's willingness to pivot between markets and to spread its investments is provided by its current portfolio.
It ranges from its US$10 million investment in ASX-listed Western Australia rare heavy earths producer, Northern Minerals, to its $7.5 million investment in TSX-listed superalloy metals company, NioCorp Developments.
In the energy space, in 2016 Lind refinanced BNP Paribas out of Columbus Energy, an AIM-listed Trinadadian oil and gas producer and explorer.
Outside of mining, Lind recently invested $4 million in Nasdaq-listed interactive education technology group, Boxlight Corp, its first foray into the US market as well as its TSX-listed blood sample cancer detection hopeful, GeneNews.
Further evidence of Lind's diversification is its recent C$4.5 million investment in Canadian listed True Leaf Medicine, a hemp/CBD wellness brand for pets.
It also has a long-standing interest in ASX-listed sleep enhancement consumer product company, Rhinomed which has linked up with New York's largest medicinal cannabis company Columbia Care and is about to launch a vapor release nasal device.
The Lind partners take pride in the fact their investment style and the relationships built have resulted in them seeing a lot of repeat business in companies they have invested in before.
Easton said: "We really enjoy getting to know the management teams we work with in order to gain a deeper understanding of the projects at hand. We take pride in the fact that many companies have transacted with us multiple times."
The goal is to identify a company with definable milestones which will lead to a market rerating, ideally within 24-to-36 months of the initial investment.
"We have been doing this for over nine years. We know when our investment structure is the right fit so we can be a supportive capital partner and help companies make sure that they are in a position to bring home the milestones."
But it may not always go exactly to plan.
"Mining executives are some of the most agile managers we work with," Easton said.
"One of the factors we like about junior exploration and mining companies is that, when confronted with poor data or drill results, they have the ability to accept reality and move on to the next project.
"If new capital is not available they adapt accordingly and slow down activity until circumstances improve."
A good example of the philosophy is the relationship Lind has built with Northern Minerals, a company which has become the only heavy rare earths producer outside China from its Browns Range project in WA which started as a greenfield discovery almost a decade ago.
Northern Minerals CEO George Bauk credited Lind as having played a key role in the company's progress.
"We first met Jeff Easton about 10 years ago and it wasn't until four years ago that we did the first of two major transactions with them, the second of which is drawing to a close and underpinned the existing project.
"The first time around the market was extremely tough for industrial metals and rare earths in particular."
Bauk considered that doing a conventional straight equity issue at the time in a tough market environment might result in aggressive discounting to a largely retail audience which could result in an onerous dilution and stock overhang position. At this, Bauk baulked and pursued the structured finance option.
"Lind was very supportive and helped through the tough times. Their involvement also helped in providing a healthy level of liquidity in the stock," he said.
The Northern Minerals story has evolved to where it has completed $41 million of capital raisings this year, including the latest $15 million share and convertible note issue with a sophisticated Chinese investor.
Travel 9,424 miles to Elk Creek, Nebraska, and North America's highest grade, large tonnage niobium project, operated by NioCorp Developments, an early Lind investment in the US.
NioCorp executive chairman Mark Smith remembers his introduction to Philip Valliere at a one-on-one meeting at a regular investment conference and being taken by his enthusiasm.
‘We were cautious about proceeding too quickly, partly because of his natural resources background and it was a new concept to us. However, the more we heard the more we felt comfortable and the trust levels escalated."
The result was that Lind has provided significant funding for the company through two investment tranches of $4.5 million and $2.5 million with the potential of a further $2 million injection in the second tranche.
"Lind provided about 23% of the total funding for our feasibility study. It has expanded beyond a traditional arms-length relationship. I am using Lind on another couple of projects that I am involved with."
The genesis of Lind came from Easton's previous position with SpringTree Global Investors, a New York institutional investment firm he co-founded in 2009.
Valliere joined Lind at its inception in 2011. Previously he worked with a New York hedge fund which he helped grow from $100 million to $2.2 billion of assets under management.
Easton said the company's structured finance strategy typically saw Lind invest $3-5 million of structured equity that provided a lump sum of capital at close, usually via a fixed price convertible security. "We believe that it is a more attractive alternative for a company to raise capital from Lind with our convertible security at a 20%-plus premium to market prices rather than the common route of doing a brokered equity placement at a 20% discount."
Additionally, Lind will lock up and not convert or sell any stock for the first three to six months and carefully calibrates its exit strategy over a two-year period so as not to adversely affect the share price.
"We see our role as a unique institutional investor that will come in at an earlier stage than most and provide capital for entrepreneurial companies to move up to the next step, effectively de-risking the company to create an entry point for the next group of institutions," Easton said.
Robert W Kennedy, Author
Rob moved into the corporate relations sphere after 30 years in financial markets in Sydney, London and New York. He ran the Australian, Japanese and Asian equity sales operations in the US for Barclays Capital andis on the international advisory board of the Melbourne Mining Club.