Q&A with Liam Farley, Founder and CEO, Xcelsior Capital
Xcelsior Capital Founder and CEO Liam Farley outlines the firm’s strategy in off‑exchange critical minerals, highlighting its partnership with Wogen Resources to unlock both the upstream and midstream value chains.
Farley points to cornerstone ASX investments, stressing the importance of downstream integration with government, OEMs, and defence groups to de-risk projects, especially in the smaller markets.
He sees Australia’s supportive environment and Europe’s awakening demand as key opportunities, with antimony, graphite, and tantalum among the commodities poised for growth.
To listen to the interview, click here:
Let’s start with an introduction to Xcelsior Capital
Xcelsior Capital is a UK-based investment and advisory firm in the critical minerals space, mostly within what we describe as the ‘off-exchange critical minerals’. We provide structured, secured capital – mainly private credit and prepayments – to producers, processors and recyclers of these metals, linked to offtake and trading rights through Wogen.
These are really technology-focused, off-exchange ‘minor metals’ with no LME or CME benchmark, where prices are agreed directly between buyers and sellers.
We’re focused on the opportunity to unlock the full value chain of those metals, especially in the midstream where we see a lot of opportunity in the sector as the West shifts from upstream sourcing to midstream processing.
Diversifying away from those and looking at how to put money to work in these other metals and minerals has been a challenge for some. But it is increasingly important to meet new demand, driven by artificial intelligence (AI), robotics, and industrialisation.
The investment thesis is based around our partnership with Wogen Resources, a UK-based and owned physical commodity trader with over 50 years of history trading the off-exchange critical minerals. The company spans everything from antimony to zircon and includes things like ferroalloys and intermediate products that are crucial in certain aspects of the value chains like metal ingots, powders, and industrial salts.
For these types of commodities, the form and purity of the commodity are just as important as the quantity of the material in the supply chain.
You can’t make antimony for defence or industrial applications without the antimony coming out of the ground, but no one actually uses antimony concentrate, and antimony metal represents a small percentage of the overall demand. Most of it is used in a downstream subsequent chemical form.
Tungsten is another example where concentrates are in high demand. But actually conversion into the oxide, into the powder, and into the form needed for aerospace and jet fighters — this is the key area where different forms of the product matter as much as the actual supply side.
So we take a holistic look at the value chain using Wogen as our longstanding partner. They have great downstream original equipment manufacturer (OEM) relationships and strategic relationships and are really able to unpack what’s actually required, what form, and in what specification a certain metal or mineral is needed in different parts of the value chain.
That opens up investment opportunities. So far our deals have been in producing or near-producing assets, and we’re focusing on securing the supply side in North America, Australia, Africa, and Europe as key areas of focus.
We’ve been focusing on that in order to secure the supply side. For instance, we made a strategic investment two years ago into Larvotto Resources (ASX:LRV) who have the Hillgrove Project. That’s now started production, having just had their opening ceremony the other week.
We’re also increasingly focused on the midstream sector and recycling side as we look at the challenge of producing materials in a required form. Everyone talks about the supply side, but increasingly we’re focused on the midstream to actually enable Western governments to get away from that reliance on the midstream processing capacity out of China.
I think we’re going to see significant amounts of capital, both public and private, flowing into that side of the industry. We’re already starting to see that, and I think the midstream is going to become increasingly important for groups to understand and, subsequently, capital will flow into it.
You spoke about the challenges in investing into critical minerals. Why do you think that is, considering there are so many companies — especially on the junior end — with projects that are trying to get to FID? Where is the disconnect in funding that upstream industry?
The way we look at the world is different today than in the past where we’ve been very focused on upstream risk and focused on the larger commodities.
When you look at a copper asset in Chile — if you get that copper out of the ground — you either make an on-spec concentrate or a copper cathode, and you’re going to be able to sell that material. It’s a very liquid, deep, transparent market.
There is no lack of suitors for an on-spec 25/30% copper concentrate. So investors never had to worry about investing in gold doré or copper projects and whether someone was going to buy the material.
When you move into the off-exchange smaller markets, that all goes away. You’re left with an uncertain demand side — or even a volatile demand side — that requires careful liquidity management.
You’re left with a complex downstream qualification and specification process. And you might have different companies with different specifications and sensitivities to different aspects of the processing flowsheets, so that the deleterious elements become very important — as well as the head grade.
So you’re often left with a small market, limited hedging and liquidity, and you’re also dealing with offtakes and contracts that require a lot of integration with the downstream.
As part of your FID and de-risking, if you don’t start with that side of the equation, you’re not going to solve the investment case. I think that’s where a lot of companies get it wrong. The result is a financing gap: these assets are too specialised for conventional capital, but too strategically important to ignore.
It’s not about the size of these resources, access, flowsheet de-risking, technology de-risking, etc. It’s about where do I sell this product? Where’s the liquidity? What’s the price volatility? How do I secure against that in an unhedgeable market?
That’s why we invest with Wogen. First, because we also bring Wogen in as a trader into our deals where there’s an opportunity to do so because they de-risk liquidity, working capital, customer access, offtake discussions, sales and marketing, etc., and that helps a company actually focus on what it’s good at, which is producing.
As an investor, in order to do germanium, gallium, zircon, titanium, tungsten, etc. — in order to underwrite the investment — it’s less about the volume of constrained resources and more about if it’s cost competitive and is there a path to selling the material at the right price.
In order to get the financeable projects, you’ve got to do integration with downstream defence and technology companies — whether it’s Tesla (NASDAQ:TSLA), a government, the US Department of War, or Lockheed Martin (NYSE:LMT), who last year secured an option over about a quarter of the planned output of Sunrise Energy Metals (ASX:SRL) who has a scandium deposit in New South Wales.
Things like that are really important to underwriting the actual investment case, especially on the credit side.
With Xcelsior, you’ve made some cornerstone investments into ASX-listed companies. From your perspective as a UK-based investor, what should UK and European-based investors understand about investing into the ASX market?
First of all, I think it’s a fantastic opportunity. In Australia, you’ve got a well-established mining and resource base, you’ve got skilled people, you’ve got a very good rule of law. It’s a country that I think is a great place to put capital.
I think the ASX represents a fairly liquid exchange where you’re able to raise capital and find good people and support for the right projects.
As an exchange for both domestic and international projects, Australia remains a very important place for resource investors. And I think groups outside of Australia should continue to look at that as an opportunity to invest into ASX-listed companies.
While there are some challenges with ASX companies that might have a team in Australia and a project on the opposite side of the world, there are some great domestic opportunities in critical minerals. The government is increasingly supportive in Australia of the off-exchange critical minerals, in particular.
There is also a push to the midstream in Australia in things like rare earths, lithium, and others. And while that’s still being built out, I think Australia should — and hopefully will — focus more on value-add products in-country rather than exporting raw materials.
In general, I think there should be more opportunities to invest in larger infrastructure-oriented investments over time on the back of high-quality resources backed by good people and a skilled workforce.
On the flip side, what’s the benefit for these companies to be linked to a UK or Europe for their funding?
Increasingly, especially on the critical minerals side, there is a public/private aspect that’s very important.
We’re seeing a lot of government-led initiatives, led by the US, but also across the UK, Australia, etc., under the critical minerals alliances, as well as the mobilisation of capital at scale to help companies get these materials into the market, which is predominantly driven at the moment by the demand side from the US.
There are a lot of metals and minerals from Australia that will end up in the US, or should end up in the US and Japanese supply chains, and to an extent in Europe as it starts to grow again.
I think Europe is waking up as a demand centre and a source of supportive capital. There’s obviously a huge institutional base outside of Australia that wants to increasingly invest in the critical minerals sector.
We’re seeing a huge mobilisation of capital from the US domestic private side, which has been focused on the energy transition story, for critical minerals to go into things like energy storage, grid stabilisation, etc.
The movement of capital from the public side is driven by Project Vault, which means that we’re seeing billions of dollars mobilised by the US, in particular, which is driving private enterprise from those European and North American investors upstream.
Because of that, we’re seeing more of that coming into the opportunity set for the resource side. Therefore, Australian companies should stand to benefit, especially in commodities where integration and downstream solutions are widening investor bases outside of the domestic markets.
Just to close, what’s most exciting to you these days?
We’re very excited about the start of the Hillgrove asset. We invested in antimony before we saw that huge spike in price. We saw new demand coming from PV manufacturing through Wogen’s global customer network, and we invested in an asset which was overlooked at the time. But we saw the opportunity.
We helped that company with a bridge financing facility, and Wogen is now the offtaker. That facility has since been repaid, and we’ve retained exposure to the seven-year offtake. We’ve supported that company along their journey to achieve a fully financed asset now in production. So, we’re really excited about them coming onstream and their success — and being a very small part of that, but a part all the same.
We’ve just made an investment into International Graphite (ASX:IG6), a predominantly midstream-focused graphite company headquartered out of Perth, and I’ve joined the board as well to help that business grow.
We see graphite as an example of a commodity where the upstream is a challenge as a standalone investment case. We’ve not seen that price inflation because China’s moved to a more synthetic graphite demand, and Europe and the US have yet to catch up in terms of the anode/electric vehicle battery side of it, which is still dominated by China.
What IG6 is doing is investing in the midstream to go into industrial applications. It has a proven Western demand side in high-purity graphite that has industrial applications like flame retardants, lubricants, etc. I’m really excited about our cornerstone investment in their recent A$4 million financing and excited about joining the board and growing that business.
Outside of that, we remain very positive on several of our key commodities and it remains a very fascinating time to be in the sector.
We’re seeing strong demand from the refractory side, so things like tantalum, tungsten, hafnium, and those things which are incredibly important to the technology-applications and defence side of the industry.
We continue to see a lot of interest in cobalt, lithium, and all the battery metals that we trade — although we’re cautious about lithium because of the supply side response from China.
I think we’re seeing good long-term fundamentals coming back in, and if this is met by sustainable supply, and we’ll see continued supportive prices there.
We’re looking to do a lot of things in both the upstream and midstream on tantalum. It’s a fantastic metal. It’s critical in so many ways, yet we don’t have a great supply side and we don’t have a great Western processing value chain. We’re still very heavily reliant on China, so I think that’s a super interesting commodity to watch. More broadly, we’re looking at producing or near-term assets – restarts and expansions – that need capital plus a route to market, and companies are welcome to get in touch.
Write to Amy Rotman at Mining.com.au
Main image: Mining.com.au
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