Q&A with Rahim Kassim-Lakha, founder and principal of Blue Sail Capital
Blue Sail Capital founder Rahim Kassim-Lakha says the global mining sector is entering a long-overdue capital reset, with cash-flowing copper, silver, and gold producers set to lead the next cycle as supply deficits deepen and permitting delays stretch timelines in North America.
He emphasises that investment-ready companies need pristine balance sheets, disciplined capital structures, and management teams with real skin in the game.
Lakha notes Australia’s favourable permitting environment, selective opportunities emerging in Africa, and a growing trend of end-users directly funding projects to secure supply.
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Let’s start with a quick introduction to your work for any readers or listeners that might not know you already.
I’m the founder and principal at Blue Sail Capital. We were founded 11 years ago and the genesis of that came from experience two decades in the making, starting in 1996 as a fund manager in the US looking at multiple sectors, but with additional involvement in a fairly large publicly listed global resource fund. So that’s where the interest in natural resources came from.
I run my own family office and we primarily look at public companies, about a third of which are in the natural resources space.
You’ve just returned from a big investment conference in the US. How would you describe the current global investment climate for the industry? Where do you see strong momentum now?
There have been a number of conferences recently that I’ve come away with a sense that what we’re seeing today is a structural capital reallocation as the market finally corrects after a decade of starvation.
I was recently looking at a site where the capital budget was cut so thin they were running 30-year-old drill rigs, which tells you just how dry the pipeline is.
I think the strongest momentum over the next 12–18 months will belong to cash flowing producers in copper, energy, and gold — those companies that can actually put physical metal in the truck today.
What do you see as some of the biggest impacts driving those investment trends and thematics today?
What I see mostly influencing my investment decisions are three key things: Interest rates, geopolitical risk, and more importantly, the commodity cycles and the availability of capital.
The primary drivers are global supply chain reshoring and the stark reality of the equity capital cycle.
Over the three decades that I’ve been a student of the markets, I’ve seen more companies than I can remember that were forced to accept highly diluted double-digit debt just to keep the lights on.
So, in this environment, trying to build a mine with a strategic non-diluted financing partner is like trying to catch a falling knife with your teeth.
You mentioned copper and gold, among other commodities, that are some of the biggest ones of interest to you at the moment. What else is driving your interest?
Since we last spoke, I would have emphasised copper, gold, and silver, and of course your audience is well aware of the overall interest in critical minerals.
I think all metals are critical, but I am seeing the most significant upside and what’s driving my views are copper and silver. These stand out because they sit at the absolute intersection of industrial demand, the great energy modernisation, and technological expansion.
After that, I see gold at the base of the pyramid. When you look at the fundamentals, gold remains the ultimate systematic risk hedge. It’s the only financial asset that isn’t simultaneously someone else’s liability. So, when you look at the supply deficits, they’re structural. We simply aren’t discovering major new deposits, and you can’t print physical metal to solve that shortfall.
What’s the solution here? Are investors putting money into exploration that could hopefully lead to these new deposits we need? It should be the explorers that will be driving new discoveries.
You’re right. You can’t have one without the other. As we just spoke about, there’s a declining production curve right now.
The good news is the cash flow margins are probably the healthiest that I’ve seen over the last quarter. We’re at 70% margins, which is better than some technology companies and large caps that people follow.
So yes, you do have to have a barbell strategy, looking at producers that are able to organically replenish their declining reserves as well as entrepreneurial experience, being good stewards of capital who have the technical strength to narrow down projects that should get those exploration dollars.
Frankly, it’s not the entrepreneurs and the exploration companies that I worry about most. It’s the fact that it’s become very uncomfortable over the last 30 years, with declining grades. With higher metal prices, you can compensate for that declining grade, but here’s the rub. It’s the multi-year permitting timelines stalling projects across the world, predominantly in North America and parts of Latin America.
In stark contrast, I have observed that Australia remains highly favourable as a jurisdiction where one can see realistic timelines and slightly more bureaucratic clarity which allows a team that has put together a long timeline plan the ability to say that they’re going to be able to move ahead and build a mine.
It’s hard to do that when you don’t have an idea of the length of the permitting timeline, because in the investment business, you have a time value of money. Combine that with the cyclicality of commodities, it becomes quite a challenge.
There are select counties and states in North America and Latin America that we’re pretty comfortable with, but we’re shifting our focus to Africa. While there are some jurisdictions in Africa that are no-go for us, there are jurisdictions or countries that we are selectively revisiting and have been investing in.
We’re also interested in companies backed by world-class management teams with a proven track record in those countries, where they’ve had successful exits previously and where the geology is elite and the path to production is highly efficient.
How do you see the overall investment landscape being shaped by changing government regulations, investment, and other incentives?
I think it’s fantastic. It’s an insertion of fresh oxygen into the room as we know that a number of professional investors in this sector have been depleted and replaced by exchange traded funds (ETFs) which have their own benefits for the end-user such as lower fees.
But, there’s been a capital starvation over the years and I think the best thing that we’ve seen in the last three years is the global government incentives, primarily led by the US. To be honest, we haven’t seen much action in Canada from the government there.
The US seems to be more serious and is taking action on government incentives, providing an excellent macro tailwind. It’s a breath of fresh air, it’s capital, and it’s sovereign policy. But the industry needs to be careful because sovereign policy alone does not build a functional mine.
We’re seeing end users in the automotive and defence industries bypass the traditional markets to invest capital directly into projects in order to secure supply.
At the end of the day, and I say this with a bit of sarcasm, a government grant could look like an attempt to make a silk purse out of a sow’s ear, especially if the asset’s underlying economics fall apart at the bottom of the cycle.
What makes a project viable to you in the current market? What criteria do you use to evaluate this?
I see that as how do we assess whether a company is truly investment-ready and if it is ready for someone to part with their capital and put it in the hands of management.
An investment-ready company requires many things, but at the top of that list, we view a pristine balance sheet as number one. Whether it’s a mining company or an automotive company, you have to look at its balance sheet, its capital structure, and if the company has an executive team with a proven track record of successful exits.
That would apply in any investment situation.
For equities, I want to see management writing their own cheques to buy shares in the open market, not just having been awarded shares at the seed level and not just collecting options.
We look at the capital structure very carefully and often enough that helps us determine what kind of conversation we are going to have and whether the company is investment ready.
These companies continue to require capital, so you have to make accommodations for a growing number of shares outstanding, but you also want to understand if the company has been rolled back and how many times.
Ultimately, if the executives don’t have real skin in the game, they’re running an expensive lifestyle club, not a business.
If you had to identify one key area where investors are currently underestimating risks and opportunities, where would that be?
One area is the underestimation of the massive opportunity of major mid-tier miners buying up high-quality junior developers, and that’s to replenish their rapidly depleting reserves.
There are a number of high-quality junior developers that are primed for a takeover. I believe the valuations have come off since the highs of Q1 2026. There are names that are quality and are for sale.
Conversely, there are investors who may be underestimating the operation risk of backing inexperienced management teams who think they can build a mine on a hope and a prayer.
This business is very capital intensive. You want to invest with teams that have seen tough days, learned their lessons, and are not interested in repeating their errors. When I’m parting with my capital, I say that my investment is not your tuition. If you haven’t delivered to the market before as a team or as an executive, it’s going to be difficult for us to bridge that gap of trust.
Wealth in this sector isn’t built on market timing, but on capturing major valuation arbitrage before the herd arrives.
Write to Amy Rotman at Mining.com.au
Images: Mining.com.au
