Top Mining Minds: Stan Bharti, Forbes & Manhattan
Stan Bharti is a professional mining engineer, business consultant, international financier, and entrepreneur. In 2002, Mr. Bharti founded Forbes & Manhattan, a private merchant banking organization with a focus on the natural resources sector. Today, Forbes & Manhattan has investment interests in a large diversified portfolio of mining companies with operations around the world.
Forbes & Manhattan’s most successful project thus far has been Consolidated Thompson Iron Mines. The company was founded in 2005 as a grassroots exploration iron ore company with assets in Quebec. Over a five year period the company raised approximately $1 billion in development capital and completed a number of major milestones. The project was sold to Cliffs Natural Resources (Stock Profile - NYSE:CLF) in May 2011 for $4.9 billion.
Another successful project was Desert Sun Mining. In 2002, Bharti acquired a controlling position in Desert Sun Mining. He developed the Jacobina Mine to near production and then four years later sold the company to Yamana Gold (Stock Profile - TSX:YRI & NYSE AUY) for $735 million.
Forbes & Manhattan's most recent exit was the sale of Avion Gold to Endeavour Mining (Stock Profile - TSX:EDV & OTC:EDVMF). Avion’s gold assets in Mali were originally acquired by Forbes & Manhattan in 2008 from Nevsun Resources (Stock Profile - TSX:NSU & NYSE MKT:NSU) for US$20 million. Endeavour Mining purchased Avion Gold on October 18, 2012 for US$389 million.
With successful exits under his belt, a new Canada-wide corporate strategy, and a portfolio of emerging mining companies in his stable, we are pleased to connect with Stan Bharti in our most recent installment of Top Mining Minds.
1. What factors will drive the mining markets over the next 12 months?
The mining sector is in a long term bull cycle at the moment. And, in general, we are in a positive trend for commodities.
Now, stocks sometimes get influenced by local changes with countries etc., so my thought is for the next 3 to 6 months - while the U.S. financial crisis unfolds and the American economy is still weak - the sector will continue to struggle. However, by the second half of the year it should become very very bullish for resource stocks. Primarily for junior stocks.
2. What should investors be doing right now?
The best thing for investors to do right now, in my mind, is to selectively look at good junior stocks. The main thing to consider is to avoid early exploration deals - buy companies with good assets near or close to production. That's the key.
Right now a lot of investment funds are getting hit with redemptions. But when the markets come back and the world gets comfortable with resources again, which will happen shortly, the first companies people will want to buy are the majors. With time investors will slowly move down the food chain and you'll see demand increasing for the juniors. The first ones to move will be the companies that are close to production or near production.
3. What are your top picks (can be a commodity sector, stock or both) and why?
The sectors which I am most bullish on are energy, potash, coking coal and iron ore. Oil is at almost $100 a barrel and I think agriculture - potash and nutrients - will do very well. I also like coking coal and iron ore. If you look at the demand for steel it is going up substantially and China is launching a big program to build again. So steel requires iron ore and coking and we have already seen the price of iron ore go up 50% this year in 2013.
Precious metals, gold and silver of course, should also do well. Within Forbes, for example, we have two very good gold stories: Belo Sun Mining and Sulliden Gold.
Belo Sun Mining (Stock Profile - TSX:BSX) is a mineral exploration company with a portfolio of properties focused on gold in Brazil. Belo Sun’s prime focus is on advancing and expanding its 100% owned Volta Grande Project, located in Para State and it already has a resource that is measured and indicated.
Sulliden Gold (Stock Profile - TSX:SUE & OTC:SDDDF) is close to production. Sulliden is focused on developing the Shahuindo Gold Project, its 100%-owned flagship property located in a prolific gold producing district in northern Peru.
Both companies operate in stable countries and given the many geopolitical risks around the world this is an important factor.
To read more from our Top Mining Minds series - CLICK HERE.