Former Banker Looking for Large Zinc Deals in 2017

Issue 181, April 2017

Christian Kargl-Simard was perfectly happy working in investment banking. “But I don't know if I'll go back.”

Still in his early thirties, he spent ten years working for two mining outfits in Toronto, pitching and structuring deals for dozens of mining clients. One was royalty group Altius Minerals. Kargl-Simard advised on a merger the company completed in 2015, then brought Altius boss Brian Dalton the idea of a copper stream in Brazil, closing the deal last year.

“We had about a billion dollars worth of opportunities working down the track.” Then last summer, Altius decided to launch a new zinc vehicle, Adventus Zinc, containing land-banks it had rolled up during the downturn in Ireland and Newfoundland. “And Brian was insistent for me to be the CEO.”

Kargl-Simard was undecided, until they went into a meeting with a private equity group to discuss funding options. “They were like, love this, how much do you want, five seconds after Brian finishing his pitch. Immediately there, between four to five groups, we had six to eight million bucks on a private round and I put a chunk of money in.”

Kargl-Simard packed in his banking job in early December, closed an $8m funding round before Christmas, listed Adventus in February and is now stalking the market, looking for a plus-sized zinc asset to add weight to the company's existing, early-stage exploration acreage.

In addition to Altius, the company's backers include private equity group RCF, London-based Greenstone and Vancouver-based investor John Tognetti, collectively holding more than two-thirds of the stock. Kargl-Simard also bundled in several former clients; Adventus has a market cap of C$39m ($29m), but counts 25 mining bosses on its shareholder list.

The company's real outing will be its first acquisition, Kargl-Simard says. He wants a project big enough to “tip the needle” in the markets, with costs that “will be comfortable at any point in the cycle”, turning Adventus into a one-stop shop for zinc investors, all the way from exploration to production.

It's a big ask, putting his deal-book to the test. Kargl-Simard is “extremely driven and he works very hard,” says a former associate in Toronto, “but he's a banker. So he wants to transact.” He has “a whole list of assets”, says one private equity investor.

Several hefty zinc assets are hiding in the inventories of the world's largest mining companies, Kargl-Simard says. “We can put proposals for several hundred million dollars on the table and they don't blink.” But dealing with large groups “takes time” and Adventus has been “culling assets” from its list in recent weeks. “Now we've got a better sense of what's out in the market.”

Adventus is also mobilising a seismic survey at its Rathkeale project in Ireland, copying techniques used by Stockholm-based Boliden, which recently announced a major new discovery at its Tara Irish zinc mine. Tightness in global zinc stocks means there has been plenty of “encouraging news for the mining scene in Ireland,” say analysts at Investec. “Zinc remains our favourite commodity.”

Adventus also has “boots on the ground” in Australia and Peru, flicking through potential projects. “The number of assets that we have reviewed so far is about 98.” Even by banking standards, “it's been extremely busy, but the zinc price is not going to wait for us.”

“He’s a banker. So he wants to transact.”

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