LinQ Resources Fund Strategy
The strategy of the LinQ Resources Fund is to identify those smaller to medium sized resource companies in Australia and overseas, with market capitalisations generally below A$3,000 million which have the potential for superior returns.
Management and the Board believe that several factors exist that create the opportunity to achieve high levels of return on investments in this niche, including:
- the difficulty often experienced by smaller resource companies to obtain debt and equity capital due to their smaller size and low share liquidity;
- institutional investment in smaller resource companies is not widespread;
- analysts' coverage of participants in this niche is not intensive; and
- a necessity in some instances for specialist financial and technical skills to analyse investment opportunities and their risks.
The investment strategy is encompassed by the following broad policy guidelines. These policy guidelines can be amended at the discretion of the Board of the Responsible Entity:
- The Fund can invest in listed and unlisted smaller to medium sized Australian and overseas resource companies with market capitalisations of less than A$3,000 million. The majority of investments are likely to be in Australian companies, however the Fund may invest internationally.
- A sub-committee comprising at least 3 directors of the Responsible Entity can authorise the acquisition of investments with a cost of up to A$3 million (non core investments) with amounts in excess of this being approved by the Board of the Responsible Entity (core investments). Investments with a cost of $1million or less can be approved by senior management.
- Non core investments have a value of less that $3 million and core investments have a value of more than $3 million.
- The Fund may invest in companies involved in a wide variety of mineral commodities, in particular (but not limited to) precious metals, base metals, bulk minerals and energy.
- The Fund may invest in companies across the full spectrum of the maturity curve from early stage exploration through to production. Depending on the nature of deal flow and market conditions, many of the Fund's investments are likely to be in pre-cash flow or emerging companies.
- The number of non core investments is to be limited to a total number of 30.
- The number of core investments is to be limited to a total number of 35.
- The Fund may utilise a variety of investment instruments to manage risk and optimise returns but may not short sell.
- The Fund will typically have a mix of Australian and international investments with Australian investments comprising 75% to 100% and international investments comprising 0% to 25% of the Gross Asset Value ('GAV') of the Fund (after purchase) respectively. For the purpose of determining international weightings, a 50% weighting is given to project location, 25% weighting to the listing domicile (if companies are dual listed eg both ASX and AIM listed, then this is taken as a 100% Australian exposure) and 25% weighting to location of management.
- Investments will typically be held for a number of years. The Fund may hold shorter-term investments when appropriate opportunities arise which will assist the Fund in improving its investment returns.
- The Investment Manager will, in some cases, take a proactive involvement in investee companies through board representation (or other means) to maximise the value of the investments of the Fund.
- The Fund's minimum weighting to available cash is $5m
Further information on the investment policy guidelines is available in the Product Disclosure Statement lodged with ASIC 11 October 2004. These policy guidelines may be amended from time to time by the Directors and are reflected above.