A definition might be “a mining company which operates internationally and predominantly, but not exclusively, through partly owned subsidiaries and affiliates”.
A mining finance house might have a history of promotion of new mining ventures through new companies in which it would retain effective equity control with the balance of the equity being sold or floated at the highest price the market would bear. It was not uncommon for M.F.H’s to sell down their equity in aging mines. It was also common practice for a mining finance house to support the market in the shares of its subsidiaries and affiliates when it judged it desirable or necessary to do so. However the introduction of insider trading rules has limited these practices.
The traditional mining finance houses saw themselves primarily as miners, and generally speaking, resisted the temptation to attempt diversification. When they did seek to diversify outside the sector, it was with only patchy success.
One characteristic of mining finance houses in the past was that, except in rare moments, their market capitalisation invariably is at a discount to their asset backing. Our goal will to try and avoid this fate via steady value creation in the Xstrata-mode.