Canadian companies pitch projects to Chinese investors

Amid the slowing market and stagnant commodity prices, Canadian companies are hoping to attract Chinese investors who want to take advantage of the market conditions at a forum in the Canadian city of Toronto on Tuesday.

This week, delegates from over 125 countries and regions flew into Toronto to attend the Prospectors & Developers Association of Canada's (PDAC) annual conference, one of the biggest events in the industry.

With China being Canada's second largest trading partner, the two sides gathered over the four-day event to hold forums and roundtables to facilitate bilateral cooperation, and discuss and overcome challenges in this current market.

At a time when cost cutting and layoffs are the norm, the mood at PDAC this year is much different from the previous year, when the markets were still booming. But the atmosphere was much more positive at the Canada-China Investment Forum on Tuesday where roughly 30 Canadian companies presented their projects to Chinese potential investors.

Robin Goad, CEO of Canadian company Fortune Minerals Ltd., was confident that Chinese investors will be taking advantage of the market slowdown to buy in on projects now when prices are low.

"Chinese investors are strategic investors, they're long-term investors, they're not looking for a quick return or trade, so there's a great opportunity right now because projects are trading at just fractions of their fair market values," he told Xinhua in an interview. "It's a good time to be investing in Canadian projects."

Victoria Gold Corp.'s president John McConnell, who has experience in doing business in China, said partnering up with the Chinese can bring them a slew of advantages.

"I understand that they have a very well-developed industrial complexes there, and advanced mining methods," said McConnell. "In Canada, we think we're the leaders in mining, but certainly Chinese know everything about mining just same as over here, so they bring money, experience, technology."

Chinese investors might see this as a good opportunity to invest, but Zhai Min, from Sino-Canada Natural Resources Fund, said there are certain criteria projects have to meet before they consider them.

"We are mainly looking for a risk-controllable and cost-efficient mining project. China has the largest market demand and Canada has the advanced technology and experiences," he said. "On the basis of these complementary advantages, Chinese companies could strengthen its say in the international market."

Low risk and well-advanced projects that are ready to go into production are some key pitching points for some Canadian companies at the forum.

Goad said that in this economic weather, grassroots exploration projects, those that are in its early stages, usually suffer.

"If you're just in the early phases of exploration, it's very difficult to secure financing, not only in China but also here in Canada," he said.

To successfully attract Chinese investors, Goad said it's important to have a plan.

"You need to have projects that are high quality, you have to have projects that are well advanced, you also have to have projects that provide exposure to commodities which are of strategic interest to buyers in Asia," he suggested.

Cameron Mingay, a lawyer specializing in Chinese investments from one of the largest and most experienced mining law firms in Canada, believed that looking at Chinese investment as opposed to domestic capital markets is key for Canadian companies right now.

One advantage for Chinese companies is that they're not always driven by capital markets, he said. What they have is "patient capital," according to Mingay, which means that they're not driven by day-to-day market concerns. He believes that ups and downs are cyclical in the commodities market, and that's something the Chinese are well aware of.

"So you're going to buy them cheaper today, you're going to spend the money getting infrastructure and other things and then the prices come back," he said. "So if anyone's got perspective, it's the Chinese. They've always been great at taking a long-term perspective."

"As we say 'patient capital' is what they've got and that's the kind of capital this country welcomes," he added.

Zhang Yan, from China's Blue Ocean Investment Fund, said that this market condition works in their favor in certain ways.

"There is a better opportunity for finding and filtering investment projects on the current market, which is more serious and much longer lasting than the U.S. Financial crisis in 2009. We have more time to inspect and negotiate with counterparts."