research portal specializing in sector research for independent
investors including mining stocks features an exclusive Q&A
interview with Andrew Portmann, Asset Manager and Director of THE
TIMELESS PRECIOUS METAL FUND.Your fund invests in the juniors in the mining sector, which differentiates it from many of the larger funds; can you tell investors
why your fund has chosen to focus on this particular group of stocks?A: Andrew Portmann, Asset Manager and Director
Our focus is directed to the juniors in the gold and silver mining sector. Peter Zihlmannn, who launched the fund in 2004, had prior to that date managed discretionary accounts in this sector. Consequently we have a wealth of knowledge and many years of experience. Therefore we know a huge range of people and projects in the junior precious mining space. This is a great advantage while filtering and analyzing the huge number of junior miners out there.
We believe that exploration companies making the transition to producers create the most value to investors. Now clearly the selection of companies is the most difficult task, knowing that many explorers never make it. It is here where our mentioned expertise helps us avoiding the black sheep in the industry.
We invest
in junior miners all over the world. Having a Malta based investment
fund allows us to buy attractive companies at any global stock exchange,
being Australia, UK or Canada.Q: Investorideas.com
Can you give investors some insight as to the performance of juniors in relationship to actual gold and silver prices and if you think this trend will continue? And in that light can you give examples of the performance of some of the companies in your fund?
A: Andrew Portmann, Asset Manager and Director
This year has not been great for investors in precious metals, nor the mining stocks. Generally speaking the miners have slightly underperformed bullion. Looking at the gold miners in more detail one sees huge variance in the stock performance. Companies with good progress, growth in resources, production and cash-flow have been rewarded. Good examples would be First Majestic Corp. and SilverCrest Mines ( TSX.V: SVL ) ( NYSE MKT: SVLC ) in the silver space and Beadell Resources and Rio Alto Mining in gold. All four companies have been successful in turning projects into production within a couple of years.
The underperformance of gold and silver mining equity in relation to metal prices since 2007 is substantial. The equity / gold ratio has never over the past 30 years been so low. Valuations of the junior gold and silver mines in regards to their resources and future production are – based on current precious metals prices – on a historical low level. Senior mining companies are increasingly looking at takeovers at these bargain prices. We are convinced that M&A activities will increase over the next couple of months. A recent example is the merger of Keegan Resources with PMI Gold or First Majestic buying Orko Silver.
Q: Investorideas.com
What are your thoughts on gold and silver prices moving into the New Year?
A: Andrew Portmann, Asset Manager and Director
The US fiscal cliff has been the dominating theme lately. The worry is that about $600 billion worth of tax and spending cuts will start hitting the US economy in 2013 and could send the US economy into recession. This issue will be solved, as we do not believe the new government and the president will allow the economy to slide back into recession. Gold will profit as well, as the Fed will support the financial markets, the government and the economy with ample liquidity. So, in the end it is the ongoing macro-economic issues supporting the gold and silver price. While the Fed, the ECB and the BOJ are gradually printing more and more money and devaluing their currencies, gold will appreciate. We have no doubt that silver will follow gold's path up.
In the wake of higher gold prices the mining stocks should outperform both global equity markets as well as gold bullion.
Q: Investorideas.com
Can you tell investors some of the top factors in your research/decision making process when evaluating a junior mining company?
A: Andrew Portmann, Asset Manager and Director
In the junior mining sector it is important to be a stock picker. For us this means looking very precisely at the project/s and the management of the company. Having a quality management team in place is the basis for a successful company. The question for us is, can they advance the project toward a mine and will they be able to raise the needed capital to get there? Juniors currently are having a very difficult time getting funding for exploration and early stage projects. Consequently selecting companies with sufficient cash in the bank is essential. Everyone will tell you: “Grade is king.” But as we can see from mines in Nevada this is only half of the truth. It is the relationship between grade, tons, depth and more that show us, if the metal can be extracted economically. We see ourselves as value investors, which mean we are looking for the best value available. If we believe a resource can be turned into production within four years and you pay $50 for ounce; well then this value proposition.
<Q: Investorideas.com
Typically what kind of investors is attracted to your fund and what are the process/criteria for an interested new investor?
<A: Andrew Portmann, Asset Manager and Director
We offer a product that invests
in junior precious metals mining companies only. There are not too many
around like us that can choose from the most promising juniors on
global bases. Investors believe that the historical low valuations
provide a good opportunity to invest in gold equities and that the
junior offer superior return to junior companies in the next price move.
Subscription of our Malta based SICAV fund can be done through your
bank or directly, with no extra charge, at the fund's custodian bank.
The fund offers weekly liquidity with no waiting period.THE TIMELESS PRECIOUS METAL FUND (http://www.timeless-funds.com/en/timeless-precious-metal-invest-philosophy) invests in listed mining companies of medium or small market capitalisation which have to fulfill the following criteria:
- Companies that are in production on the one hand, and have a high potential of substituting exhausted resource bases, and at the same time, of adding new reserves.
- Companies that are set to go into production and that have considerable exploration prospects
- Companies that concentrate on the exploration for precious metals in commodity rich regions that already have a substantial resource.
- We consider the experience and integrity of the mining company's management as another important investment
Shares of medium sized mining companies are more volatile than big cap mining stocks and are best suited for long-term investors. We also believe that mining companies are extremely undervalued at this time in relation to gold and silver and that, for this very reason, they offer an outstanding capital gain potential.
<Andrew Portmann, Asset Manager and Director Bio and contact info
Director, domiciled in Zurich, Switzerland
Over 15 years of experience in the banking and finance industry. He holds a BBA and is a certified international investment analyst (CIIA). Before joining Peter Zihlmann he was co-manager of two precious metals hedge funds at Incentive
Asset Management.
Email contact: andrew.portmann@pzim.ch
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