As a lender to resource companies at the prefeasibility and later stages, Sprott Resource Lending routinely sees a “massive” range in the quality of work that mining companies perform on reserves and resources statements, said managing partner Jim Grosdanis, at the Mining Investment Event of the North conference in June.
“While they might be at the [definitive feasibility study] stage… we would look at it and say, it’s still economic, but it’s not necessarily what the company’s purporting,” said Grosdanis during a fireside chat with Matt Gordon of CRUX Investor. “But I think the market has gotten smarter over the years — at least over the last 12 years — and they see through that promotional side.”
Part of Sprott’s due diligence is to ensure the companies they lend to have a high quality of resource so that if things “hit a rough patch” they’ll be able to tap the market or a partner, Grosdanis said on June 19 at the invite-only event, organized by VID Conferences.
“Part of our diligence is [to determine] who will want to own this company?” he said.
“Our business is not to be an owner – our business is to make sure that we’re not an owner.”
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