Lion Selection

Investment Philosophy

To provide funding at an early stage to assist companies along the development curve, and then exit following considerations of value after project development and the timing of the investment cycle.
  • Investments are carefully selected from a global universe of listed and unlisted opportunities.
  • Backing high-quality people is an essential element.
  • Project assessment is a blend of valuation and risk assessment, targeting multiples of upside in situations with predominantly manageable risks.
  • In-house mining experience and networks provide leverage to rapidly assess people and projects.
  • Achieving diversity and reducing stock specific risk by taking a portfolio approach.
  • Regularly interacting with investee company management to maintain a current understanding.
  • Long-term investment approach: 3–5 year investment horizon to capture the uplift in value as companies progress projects to production.
  • Life cycle of a resources company: exploration to production.


Resource company evolution:

  • The value of a resource company reflects its ability to generate future cash flow from its projects. In general, as a project advances from exploration through to production, the level of risk diminishes. Risk reduction may be linear; however, company value often reflects risk and sentiment and tends to be more volatile.
  • Many resource companies start out with a collection of exploration stage assets. Typically, exploration stage companies trade on a low valuation reflecting the key risk – will their exploration activities find a deposit?
  • In some cases, a discovery of a mineral deposit takes place. A discovery sets pulses racing as speculation swirls around what the discovery could potentially be worth. It is not unusual for the value of a company to run ahead of what the facts justify and to be highly reactive to news flow, as the market speculates on further positive developments.
  • After a discovery, a project is subject to an economic assessment. During this period, news flow is typically less frequent and usually consists of updates that are much less exciting than the exploration/discovery phase. Whilst this news generally deals with reducing technical risk of the project, speculative interest wanes as investors focus on how much it will cost to develop a deposit rather than how large it could become, and it is common for company value to decline.
  • Generally, the largest fundraising a company undertakes is to sponsor development of its project. Until this is complete, a company is subject to the risk that it may not secure adequate or acceptable finance.
  • Once funding is secured, the company builds the project. Through this process, the company faces two main risks – will funding be adequate and can the project be developed successfully? The market often discounts company value to account for these risks.
  • Once in production, the company generates revenue from selling products. The main risk becomes the effect that fluctuating commodity prices have on revenues. From this point onward, the market can value the project according to its ability to generate earnings, and the company may re-rate to this level over time.

Commodity degree of difficulty


  • Commodity related project risk relates to the technical difficulty associated with extracting a saleable product from the ore and the relative ease of marketing the product once separated.
  • Lion has historically invested around 50% of its available funds into gold opportunities. This has been as much by design as circumstance, rather than a particular view on the commodity. Our very strong focus on risk has always drawn us to the relative simplicity of gold projects. There have also been a substantial number of gold opportunities amongst deal flow.
  • Gold, by its nature, is generally relatively easy to separate from its host rock, and once concentrated into doré, minimal infrastructure is required to transport it, and it can be readily sold.
  • Most other mineral commodities feature increased technical risk related to the way that they occur as ores, the expense and added permitting issues of required transportation infrastructure and the transparency, size or concentration of the market into which the products are sold.