Caisse de depot creates $250-million natural resources development fund

MONTREAL – The Caisse de depot et placement du Quebec has created a $250-million fund that will make investments of between $5 million and $20 million in natural resources development projects pursued by Quebec companies.

The Sodemex Development Fund will complement the existing $50-million Sodemex Fund that has since 1996 invested in the exploration activities of more than 60 companies with market capitalizations under $500 million.

The new fund will provide financing through debentures, convertible debentures or equity.

Normand Provost, executive vice-president equity, says the fund gives the Caisse “a critical entry point” in development-stage projects which present long-term investment opportunities.

The fund is designed to alleviate a shortage of available capital, which often forces companies of this size to be acquired by larger industry players to continue operations.

Selected projects must show promise and meet a series of criteria, including being globally competitive in terms of production and operating costs and being close to adequate infrastructure, the Caisse said in making the announcement Thursday.

The fund will supported by two external members with long experience in the natural resources sector, it said.

Note to readers: This is a corrected item. A previous version misspelled the name of the fund