A Tanzanian gold mining firm part-acquired by The Montreux Natural Resources Fund is due to produce its first gold next year following “fast-track” development of two of its mines.
In September 2015, The Montreux Natural Resources Fund, formerly The Montreux Commodity Trading Fund Cayman, expanded its focus in the gold-mining sector by acquiring a 50 per cent stake in the Tanzanian mining investment company GRB Mining Ltd, based in Dar Es Salaam.
GRB Mining, which has developed a niche high value-low Capex-low Opex mining model, focuses on the production of gold from small-scale high grade mines in Morogoro, Tanzania.
Since September last year two undeveloped GRB gold projects have had management, technological and human resource infrastructures put in place. This has put the new mines on course to produce their first gold pour in the first three months of next year.
The Montreux Natural Resources Fund, which seeks to generate returns through a range of commodity-related transactions, is managed by investment advice firm Montreux Capital Management Cayman, which advises on more than GBP200 million worth of assets.
Montreux Capital Management Cayman’s managing partner Oliver Harris (pictured) says the fund’s 50 per cent stake in GRB Mining will enable The Montreux Natural Resources Fund to secure long-term, stable, regular flows of gold and so complement the fund’s arbitrage strategy.
“The fund’s investment in GRB Mining brings unique investment opportunities brought about by the collapse of the commodity super-cycle, a commodity prices decline and a subsequent transformation of the gold-mining industry,” says Harris.
“With the recent resurgence in the gold sector we felt it was a right time to move strongly into physical gold mining.
“GRB Mining has over the last year developed what were little more than open pits into a modern gold-mining business which are now on track for their first gold pour.
“We always felt an opportunity existed to generate superior returns by investment in underperforming operating and near-operating mines in Tanzania, and in their fast-track development.
“This was particularly viable considering reticence to invest in large capex, excessive duration payback projects.
“GRB Mining’s high-quality resource assets at a low acquisition cost and with low technical and commercial risk are core investment drivers for us. The GRB Mining investment, together with using the fund’s arbitrage strategy, should provide investors with strong returns.”
GRB Mining’s managing director is Dr Steven Newbery, a geologist with more than 25 years’ experience in the discovery of base and precious metals and founder of the Dubai-based MLI group of companies.
Newbery says: “The possible bottoming out of the resource sector and renewed optimism in gold provides GRB Mining an ideal opportunity to move aggressively in establishing GRB’s small-scale mine strategy in resource investment and development.
“Tanzania has considerable new mine potential and provides a considerable opportunity to develop further high value gold mines and consolidate strong cash flows based on low cost gold production”
The fund has a target rate of return of 15 per cent per annum with no upper limit.