Ranjeet Sundher is the president of Canrim Resources Pte Ltd., a private Singaporean minerals exploration company focused on resource development in Mongolia. Mr. Sundher has over 13 years of successful investment experience in Mongolia where he has created impressive shareholder returns. While his first Mongolian venture, started in 2001, generated a return of 20x, his second business, Red Hill Energy, generated a return of 27.2x (at closing of the transaction).
Mr. Sundher and the Canrim team are veterans in Mongolia’s resource industry, returning to build another resource development business while Mongolia experiences the bottom of an economic cycle.
Could you briefly describe the history of Canrim Resources?
Founded in early 2014, Canrim Resources Pte Ltd., a Singapore-incorporated holding company, controls several subsidiaries established for the purpose of developing minerals-related business activities in Mongolia. With over 50 years’ combined management experience in Mongolia’s resource sector, as well as having offices in both Singapore and Ulaanbaatar, Canrim has positioned itself as a strong player in the Mongolian minerals sector, seeking to execute on transactions of minerals licences in both the primary and secondary markets.
We are building this company and positioning it for renewed economic activity in the mining sector. The 5-year old moratorium on the issuance of exploration licences was removed earlier this year and we now anticipate a resurgence in mineral exploration in this under-explored and resource-rich country.
Why is this the correct time to invest in this sector in Mongolia?
Over the past three years Mongolian economic growth has slowed significantly and now, in order to re-invigorate itself, the Government of Mongolia is seeking to offer favourable terms to junior minerals explorers, thereby re-encouraging foreign direct investment.
In January 2014, the Parliament of Mongolia approved the government’s Mining Policy 2014-2025, and in the spring session of Parliament the Minerals Law was amended in accordance with the mining policy document. It is now widely expected that the licensing system will re-open shortly.
The mining sector of Mongolia, and especially the junior mining sector, is historically proven to create wealth for investors and for Mongolia. This was confirmed in Mongolia in 2000-2002 when the world-class Oyu Tolgoi copper-gold deposit (now an operating mine) was discovered and again in 2009 when owner Ivanhoe Mines (now majority-owned by Rio Tinto) and the Government of Mongolia agreed to modified terms regarding the ownership of Oyu Tolgoi.
Under favourable economic circumstances, with reported potential mineral wealth of $1.3 trillion and the majority of the country being underexplored, Mongolia will almost certainly experience rapid growth in the foreseeable future. The Company intends to participate in this growth and sees this as the right time to re-engage.
Mongolian FDI inflows began a sharp correction in 2011. Poised to recover as quickly as its peer countries, Mongolia has the advantage of tremendous unexploited mineral wealth with an attractive risk/reward spectrum at present.
The Company is positioning itself ahead of this change to benefit from the time when the issuing of mineral licences commences. To conduct continuous research and due diligence in advance (using Canrim’s and its Mongolian partner’s proprietary database) allows the Company to select and bid for the best mineral-prospective land when it becomes available.
Do you have a partner in Mongolia?
Yes we do. Mr Sado Demchigsuren Turbat, is Canrim’s country manager and a co-founder as well as a long-time personal friend who has been my business partner in Mongolia since 2001. Mr Turbat is a highly successful and well-respected entrepreneur with senior expertise in the minerals industry. He co-authored the 1997 Minerals Law and is the founder of Mine Info LLC., one of Mongolia’s largest mining services companies whose clients include major mining companies.
Furthermore, we have a stellar geological team, including our chief geologist Mr Bolderdene Banzaragch who was a previous head of geology at the Minerals Resource Authority of Mongolia (MRAM).
Canrim entered the country early and is positioned to acquire licences either directly from the government or at distressed prices in the secondary market. This strategy, in addition to the reputation and prowess of our Mongolian team members, give us an advantage within the industry.
We are positioned well for a bright future in Mongolia.
What mineral resources are you focused on? Do you have a competitive advantage?
Our present focus is on copper-gold, gold, coking coal and petroleum projects. However we are looking at other commodities on a case by case basis.
Not a traditional ‘mining’ company, Canrim Resources is a resource development company utilising what we firmly believe is one of the largest proprietary geological databases in Mongolia. This database includes digital and archived paper-based information on historical and existing properties and projects, including geology, geophysics, geochemistry, trenching and drilling.
Our strong organisation and extensive information database are two of our competitive advantages which will benefit us in our vetting of prospective acquisitions.
Have the recent visits to Mongolia by heads of state such as Xi Jinping and Vladimir Putin affected investor sentiment?
Yes, there have been signs of renewed investor interest in Mongolia since Mr Xi’s and Mr Putin’s visits. Separately, we are aware of a number of institutional investors who have conducted due diligence trips to the country as well as several Asian investment funds that seek to deploy capital in the Mongolian mineral resources sector.
You are using what you call the Prospectors Generator’s Model, what is this?
A junior resource company employing a Prospectors Generator’s (‘PG’) business model typically leverages an intellectual advantage allowing them to collaborate with better-funded partners to absorb the high cost and inherent risk of mineral exploration.
Shareholders are exposed to more discovery upside when the PG company tests numerous prospective targets with partner funding. Using partner money to fund exploration and growth allows the PG company to conserve capital, reduce shareholder dilution and extend the life of the company.
Initially Canrim will work on its own to acquire licences and projects. However, in the future it may switch to the PG business model to expedite project timelines and minimise dilution.
Is Mongolia a safe jurisdiction in which to invest and carry out mining activities?
The Company management is returning to do business in Mongolia precisely because of the many positive experiences it has had in Mongolia since the early 2000s.
Earlier this year the government of Mongolia passed a revised Foreign Investment Law which states there is to be no differentiation between foreign and Mongolian investors, eliminating the previous discrimination which existed in the judiciary system.
Specifically, exploration and mining activities may be conducted with relatively low interference, compared to developed countries, as long as the relevant companies cooperate well with various levels of government.
Where do you expect Canrim to be in 2016?
I’m pleased that you have asked this question. Indeed we have a very clear vision for where we want to be by 2016. Canrim will seek to achieve liquidity in its portfolio either at the asset or corporate level when sufficient value has been added to the business. Canrim intends to achieve liquidity in 2016/17 through direct asset sales to publicly listed entities to expand their project portfolio, joint venture and free carried interest in specific projects and ultimately the sale of the corporate entity, with its subsidiary assets.
Thank you.
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