Our investment strategy comprises of investments in private assets, in which of late we have taken a private equity approach, and public equity (e.g. listed on a stock exchange). These classes of investment can be held actively or passively.
Active investments are typically larger investments where Cadence seeks to positively influence the management of investee companies by providing oversight and guidance at Board level to enhance shareholder value and minimize downside risk.
Our private investments include mineral exploration and development projects, run either through joint venture companies or joint venture licenses, operated by the joint venture company with in-country partners who have the requisite knowledge and expertise to advance projects. More recently in this part of our investment portfolio, we have taken an active part in the management and decision making of our investee companies, using legal agreements to provide negative control mechanisms to protect the Company’s investments. We ideally seek to fund private investment via earn-ins, and if possible, look to incentivise our joint venture partners via equity in Cadence against deliverables that will add value.
The Equity Investment segment includes both active and passive investments as part of our trading portfolio. The trading portfolio consists of investments in listed mining equities where the Board believes the underlying investments are attractive. The focus is to invest in mining companies that are significantly undervalued by the market and where there is substantial upside potential through exploration success and/or development of a mining project towards commercial production. Ultimately the aim is to make capital gains in the short to medium term. Investments are considered individually based on various criteria and typically are stock exchange traded on the TSX, ASX, AIM or LSE.
In addition, we seek to further mitigate our risk exposure by obtaining a deep fundamental understanding of an investment, its potential economics, operating and legal environment and management team. By doing so, we can eliminate many of the potential investments that we review during the year and fund projects that we believe will deliver value to our shareholders.