lev-os Preparing Real Asset Investment Cases
Structures real asset investment recommendations with commodity thesis, asset-level analysis, and risk assessment for Investment Committee (IC) presentation across natural resources, energy, and commodity sectors.
When To Use
- Preparing an IC memo for a new real asset opportunity (mining, timberland, farmland, energy infrastructure, upstream/midstream oil & gas)
- Building a recommendation package for follow-on capital into an existing resource position
- Documenting a commodity-linked thesis for portfolio construction or allocation review
- Structuring diligence findings into a presentable investment case for committee vote
Inputs To Gather
- Commodity thesis: Supply/demand fundamentals, price outlook (spot, forward curve, long-term equilibrium), key macro drivers (decarbonization, electrification, population/caloric demand)
- Asset-level data: Reserve/resource estimates (proven, probable, possible), production profiles, decline curves or yield projections, remaining useful life
- Operator/counterparty profile: Track record, management team, operational capabilities, ESG posture
- Financial model or projections: Capital expenditure schedule, operating cost structure, revenue assumptions, IRR/MOIC sensitivity tables, breakeven commodity price
- Title and rights documentation: Mineral rights, surface rights, royalty obligations, lease terms, concession/license status [VERIFY jurisdiction-specific title requirements]
- Regulatory and permitting status: Environmental permits, water rights, reclamation/bonding obligations, political/sovereign risk assessment [VERIFY applicable regulatory regime]
- Comparable transactions: Recent M&A comps, royalty/streaming deal benchmarks, public market trading multiples for similar assets
- Risk register: Geological/technical risk, commodity price risk, regulatory/political risk, operational/execution risk, ESG and social license risk
Workflow
Frame the commodity thesis — State the macro view on the target commodity. Identify where the asset sits on the global cost curve. Summarize supply/demand dynamics with a 3-5 year outlook and a long-term structural view. Cite forward curves, consultant forecasts, or internal models with clear date stamps.
Profile the asset — Describe the physical asset: location, geology/soil/resource base, infrastructure access, production history, and remaining reserve life. For extractive assets, present reserve categories (1P/2P/3P) with source and effective date. For renewable resources (timber, ag), present sustainable yield estimates and rotation/harvest cycles.
Assess the operator — Evaluate management capability, operational track record at comparable assets, capitalization, and alignment of interests. Note any key-person dependencies or governance concerns.
Present the financial case — Lay out the base-case financial model: entry price/valuation, capital deployment schedule, projected cash flows, target IRR/MOIC, and payback period. Include sensitivity tables across at least two axes (commodity price vs. production volume; discount rate vs. terminal value). State the breakeven commodity price explicitly.
Analyze risks and mitigants — Structure risks into categories:
- Geological/technical: Resource uncertainty, recovery rates, decline assumptions
- Commodity price: Downside scenario at trough pricing, hedging strategy if applicable
- Regulatory/political: Permitting timeline, sovereign risk, carbon pricing exposure [VERIFY specific regulatory jurisdictions]
- ESG/social license: Community opposition, water/emissions footprint, tailings/waste management
- Execution: Construction/development risk, contractor availability, supply chain
- For each risk, state the mitigant or residual exposure.
Benchmark against comparables — Present 3-5 relevant transaction comps or public-market comps. Normalize on standard metrics ($/acre, $/boe of reserves, $/MW, EV/EBITDA). Explain premium or discount relative to comps.
State the recommendation — Clearly articulate the investment recommendation (invest/pass/conditional), requested allocation size, proposed structure (equity, royalty, JV, streaming), key conditions precedent, and any IC-specific asks (e.g., staged capital commitment, co-invest rights).
Output
The IC investment case should include:
- Executive summary (1 page): Commodity thesis, asset snapshot, headline returns, key risks, recommendation
- Commodity market overview (1-2 pages): Supply/demand, price outlook, cost-curve positioning
- Asset description (2-3 pages): Physical profile, reserves/resources, production, infrastructure
- Financial analysis (2-3 pages): Base case, sensitivities, breakeven, return waterfall
- Risk matrix (1-2 pages): Categorized risks with likelihood/impact ratings and mitigants
- Comparable transactions (1 page): Comp table with normalized metrics
- Recommendation and terms (1 page): Structure, size, conditions, voting request
- Appendices: Detailed reserve reports, maps, regulatory filings, model assumptions
Quality Checks
- Commodity price assumptions are sourced and dated; forward curves reference a specific date
- Reserve/resource estimates cite a qualified person's report or equivalent technical authority [VERIFY reporting standard: NI 43-101, JORC, SEC S-K 1300, PRMS]
- IRR and MOIC are presented on both levered and unlevered basis where debt is involved
- Sensitivity tables span a realistic range including at least one stress scenario below cycle-trough pricing
- All acreage, mineral rights, and concession terms are confirmed against title documentation
- ESG risks are addressed with specificity, not generic boilerplate
- Comparable transactions are within 24 months unless market conditions justify older data
- Recommendation clearly states vote requested, capital amount, and any staged deployment conditions
- All figures reconcile between the executive summary and the detailed financial analysis