Natural Resource Sectors Open Opportunities in the Private Equity Investment

The world population has increased by more than one and a half billion people since 1990 and it has been projected that it will increase by another billion by 2025. Although increase in food production has taken up with the pace of rise of population, the natural resource sector is struggling to keep with the increase in the demand. And this particular section of the industry gives some promising opportunity for the investor to make considerable amount of investment. The world has vast reserves of natural resources, not all of them are in production, and even there are many more which are yet to be discovered.

The private equity firms have never been traditionally involved with the mining industry, but with every passing day, more and more amount of private equity firms are finding interest in the investment opportunity and they are even finding investors who are keen to make long term investments in natural resources as well. Experts like Javier Garcia Teruel Avila has made one very crucial point, this is private equity investment, and not some mere publicly traded company. Hence, the exit will not be so easy from it, although the opposite of it has got tremendous potential.

Mining can indeed be a capital intensive but there are hardly any reserve which are so easily accessible. As a result of it, the start up cost is really small and the investors find it more prudent since the actual circumstance can be much different than what the real picture depicts. There are a few clauses which need to be verified before one takes decision to invest in mining industry. Before you plan to make some investment make sure you have the following documents ready in your hand.
  • There must be a report prepared by a third part geologist stating the crucial facts about the place where the mine is located. If the report is prepared by the owner of the mine, then there will be very few information mentioned and it's of hardly any value to the outside investor.
  • There must be Assay reports as well, which are typically referred in the geological reports prepared or might be present as an addendum. This Assay report generally mentions of the estimated stock of metal or mineral that can be extracted from a ton of ore in a specific sample. There are different ways of preparing the Assay report and not all will reveal the same information of one particular sample.
According to the expert views of Javier Garcia Teruel Avila there are mainly three different types of investment methods that can be applied in a mining venture. An investor who is looking forward to spend some money on the mines can either use any one or a combination of multiple investment policies in the project. The three types of direct investment policies are:
  • Purchasing an equity position from the company that owns the mine.
  • Investing in a joint venture with the mining company
  • Having a royalty position in the mine
There are cash strapped entrepreneurs who are owners of mines worth trillions of dollars and they are waiting for the investors to make some investment in order to put the reserves into production. If you're willing invest and make some profitable returns, the iron is hot to be hit. Make your move and hence make some dollars easy as well.

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