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NewGen reports 2010 perfomance for the NewGen Mining Fund SPC and NewGen Mining Fund LP of 88.7% (net) and 84.4% (net), respectively.
NewGen announces the launch of the NewGen Mining Fund LP for Canadian Accredited Investors.
NewGen launches the NewGen Mining Fund SPC for offshore investors.
The convergence of cyclical and secular forces is supporting a major rally in commodities. The global financial crisis has ensured that this leg up in metal prices will be stronger and more sustainable than during previous cycles.
The dramatic shift in global demographics and resurgence of emerging market growth is driving an unprecedented demand for metals. Urbanisation and industrialisation of the developing world will be one of the defining themes of this century. According to UN, the world population will reach 8.3 billion in 2030 — of which 5 billion will live in cities from 3.3 billion current. China urban population to reach 970 million by 2020 from 523 million in 2005 (growth = size of US + Japan).
This is causing major demand for raw materials at a time when supply limitations persist, which has been exaggerated by reduced access to capital during the financial crisis. Existing producers dramatically cut growth plans, while development projects were put on hold and exploration budgets slashed. Many projects were permanently shelved or are very costly to restart. Furthermore, there have been very few new world-class discoveries since 2002 despite a 5x increase in exploration spending (big projects are increasingly difficult and more costly to find) and once discoveries are made, greenfield projects typically take 7-10 years to develop. Finally, there are major structural changes that are shifting the marginal cost curves higher – deeper mines, declining head grades, higher energy and labour costs, and added social and environmental issues.
Metals are also increasing in importance as an investment asset class as governments, institutions and individuals seek protection from currency devaluations and the lasting effects of unprecedented government expenditures. Gold and other tangible assets are a store of value during financial and political instability and as a hedge under inflationary conditions. The magnitude of monetary and fiscal stimulus will make it very difficult to prevent inflation in the medium to long-term as governments are typically too slow to tighten. This is causing the stature of the US dollar as the world’s reserve currency to be called into question. As a result, there is aggressive diversification into hard assets.
