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TABLE OF CONTENTS Mar 31 - Apr 6, 2014 Volume 100 Number 7 - 0 comments

Chrysalix to fund innovators

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By: Anthony Vaccaro

Chrysalix Global Network, a venture capital fund based in Vancouver, is looking to be a player in the mining industry’s next wave of innovation.

One of the fund’s partners, Charles Haythornthwaite, was in Toronto for the Prospectors & Developers Association of Canada convention and sat down with The Northern Miner to explain why Chrysalix has targeted the mining industry.

Chrysalix sees itself as a fund with enough expertise and capital to drive early stage technologies that could become standard in the mines of the future.

“We are looking for transformative, breakthrough ideas that could really move the needle in an energy intensive industry,” Haythornthwaite says.

The fund is pursuing new technologies that can deliver environmentally friendly and efficient processes.

Although Haythornthwaite says that more mining companies are thinking about innovation, the industry isn’t considered to be at the forefront of implementing new ideas.

“The way the mining community should think of innovation is that it’s a little like exploration,” Haythornthwaite says. “Exploration guys understand high risk and high return and manage it by opening up a big funnel of opportunities, and as cheaply and quickly as they can, they gain more information so that they can fail fast and fail cheaply. That allows them to rule the failures out and increase their commitment to the ones with true potential. That’s how we treat innovation and build start-up companies.”

Haythornthwaite earned a PhD in applied physics and an MBA from the University of California at Berkeley before helping found a start-up solar company. He joined Chrysalix five years ago.

The fund is divided amongst four industry verticals, with mining being the most recent addition. The other three are oil and gas, electrical energy and chemicals. It has a long track record, having formed partnerships with leading blue chips in the oil and gas space such as Royal Dutch Shell (LSE: RDSA) and Total (NYSE: TOT).

After raising capital — the current fund raised $150 million — Chrysalix’s team sifts through 800 opportunities a year to find the three or four that it thinks could make an impact on a given industry.

It then invests capital and offers expertise to help guide the company’s growth, ideally until it can complete an initial public offering and stand on its own.

While some of the ideas they investigate come out of universities and research centres, Haythornthwaite says, most come from people in the industry who have recognized inefficiency and are following an entrepreneurial dream to remedy it.

In the case of mining, Chrysalix is looking to repeat the strategy it used in the oil and gas space.

“We are further from a large company’s core business, and we take early stage risk and give them access to the upside,” Haythornthwaite explains. “What history tells us is that often start-ups come up with the game-changers . . . larger companies work with us to avoid being blindsided, and to be among the first to be aware of a new technology.”

In the mining space Chrysalix thinks privately held Mine Sense may just have such a technology. Chrysalix’s investment in Mine Sense is its first mining-related investment.

Mine Sense is looking to tackle the falling grade issue experienced industry-wide by creating a technology that uses sensors and sorting to upgrade base and precious-metal ores.

It can do this by scanning and sorting rocks on a wide conveyor belt or by integrating with a scoop, where it can scan as much as 70 tonnes of rock to determine if it is worthwhile to send it to the mill or discard it onto the waste pile.

“The benefit is that many mines can have 20–50% waste rock that is being processed,” Haythornthwaite says. “That is tremendously wasteful. If you can remove poor quality rock as far up stream as you can, you increase efficiencies drastically.”

Mine Sense is developing a range of sensors, including a conductivity sensor that is at the prototype stage. The company is looking to demonstrate the technology in the field, where  it could be tested on an offshoot of a production line or on stockpiles so that commercial milling isn’t interfered with.

We’ll see if Mine Sense can create a commercially viable technology, and whether Chrysalix’ faith in the firm, and mining innovation more generally, pays off.

“The companies that take a more forward-thinking approach will get rewarded, and those that don’t will get left behind,” Haythornthwaite says.

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