Almost 40 per cent of the money is deployed, courtesy of Appian’s 2020 investment in a Victorian mineral sands play controlled by Kalbar Resources, but Mr Scherb said the private equity firm was already looking for other local options as it considered launching its third fund.“About 60 per cent so far is not committed. We’re about to close on a gold and silver deal that will take us over the 50 per cent threshold, so we’re looking for maybe another one or two investments before we can raise Fund 3, which will be a larger fund,” he said.“We’ll be deploying this over 2021.”Australia’s junior mining sector enjoyed a new investment boom in the second half of 2020, with BDO analysis suggesting that local explorers raised more than $2bn in the September quarter, and were now in the best financial position since the height of the commodities boom. Mr Scherb said that meant there was stiff competition for equity investments, but Appian took a different approach to the “hot money” that has flooded into the sector. “There’s a lot of money suddenly out there, but I can’t say it’s going to be similar money. We’re a 12 to 15-year fund, and a lot of the money out there is very short term, so they’re looking at one month or three month mark-to-market. So that’s hot money looking for commodity price exposure, or trying to get the run up in speculation,” he said.“What we do is very different. We don’t outsource any kind of technical due diligence at all. We have in-house this massive technical army — engineers, geologists, metallurgists — and that allows us to take a completely different view on an asset.“Good assets are out there, the way you create value in this sector is through that deep technical analysis and that’s our bread and butter.”Appian is already more than familiar with Australian companies and assets. It counts former BHP boss Chip Goodyear on its advisory board, as well as Fortescue Metals group deputy chairman Mark Barnaba, and Mr Scherb said Australian investments would remain one of the focuses for the private equity firm.It bought the Brazilian nickel operations of former Australian market darling Mirabella from the ashes of receivership, is helping finance ASX-listed Peak Resources’ Tanzanian rare earth project, and was a shareholder in Avanco Resources and its Brazilian gold and copper projects before its $420m sale to OZ Minerals in 2018.Australia has been the site of Appian’s single biggest investment, with the company agreeing in mid-2020 to pump $144m in Kalbar Resources’ Fingerboards mineral sands project, 20km northwest of Bairnsdale in Gippsland, as the company pushes through environmental studies on the former Rio Tinto project.Kalbar has said it will cost more than $200m to bring the project to production, with the company planning to produce about eight million tonnes of heavy mineral concentrate over an initial 15-year mine life. The product will initially be exported as a concentrate, although Kalbar has talked of long-term plans to build a mineral separation plant when it kicks off mining at Fingerboards.Appian’s investment will eventually give it a stake at the project level of up to 50 per cent if the plan comes to fruition. Discovered in 2003 by Rio Tinto, the Fingerboards was once listed as one of the mining major’s most prospective discoveries, until the global financial crisis undercut zircon prices and Rio pulled back from the project.Mr Scherb said the Fingerboards investment was typical of the way Appian did business.“For Fund 1 we looked at 1200 projects, and made only eight investments. We can go earlier stage than our competitors, and the benefit of having such a long-term fund structure is that we don’t have to be investing just in producing assets.“We can invest in something that’s four years away from production, so we’re happier taking on that longer tail development risk than most investors in this sector,” Mr Scherb said.



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