Archive for the 'Mining' Category
November 17th, 2010 by Tom Minney
A UK-Mozambique Investment Forum 2010, is coming to London on 2 December. It is organized by the Government of Mozambique, with Africa Matters Limited and Developing Markets Associates. The Government of Mozambique is sending a high-level delegation, led by Hon Oldemiro Marques Baloi, (Minister of Foreign Affairs and Cooperation), accompanied by Hon José Pacheco (Minister of Agriculture) and Hon Paulo Zuchula (Minister of Transport and Communications). Other ministries to be represented include finance, tourism, mineral resources and the Central Bank of Mozambique and other high-ranking officials and business leaders.
Mozambique has had consistently high economic growth recently. Topics include the economic outlook and investment opportunity, including inputs from the Investment Promotion Centre. Tourism, agriculture, mining and infrastructure development are all key sectors for investment and each has its own session, featuring top private sector investors and leading Government officers and ministers.
According to the promoters: “The day’s programme is designed to paint a contemporary picture of the investment climate in Mozambique and the country’s on-going efforts to attract foreign direct investment. This will be followed by further bilateral meetings, as may be required, on specific investment opportunities. The audience at the Forum will include many of the most senior institutional investors in Europe and will be one of the most significant promotions to date of Mozambique’s efforts to attract investment on the international stage.”
Top UK speakers and participants include Stephen O’Brien, Under-Secretary of State for International Development, Lord Mark Malloch Brown (Royal African Society), Lord Richard Newby (Lib-Dem Treasury spokesperson) as well as Baroness Lynda Chalker, Chairman, Africa Matters Limited. Co-organizer is the High Commission of Mozambique.
For more information and invitations contact Robyn Kingston at Developing Markets Associates on tel: +44 (0)203 117 2500 or email robyn.kingston[at]developingmarkets[dot]com.
October 26th, 2010 by Tom Minney
Lontoh Coal (www.lontohcoal.com), a South African unlisted mining company with projects in Zimbabwe, wants to do its next public offer in Hong Kong, according to a Reuters report on a South China Morning Post story. The initial public offer (IPO) aims to raise up to $500 million.
According to the report Lontoh chief executive Tshebo Kgadima said he had chosen to list in Hong Kong as it might have been difficult for his company to sell shares in New York or London as the United States forbids trade or investment with Zimbabwean firms linked to the country’s president Robert Mugabe: “It is easier for us to look towards Asia than North America or some European markets.”
The newspaper said the IPO is planned for the first half of 2011 and that Macquarie’s Johannesburg office was an adviser of Lontoh on its fundraising plans. Lontoh is worth up to $1.5 billion, is planning a Hong Kong IPO in the first half of 2011, the newspaper said citing Lontoh’s chief executive Tshebo Kgadima.
Reuters commented that Lontoh would be the first African company to list in Hong Kong as the Hong Kong bourse is making an effort to attract more foreign companies to seek a listing in the territory.
The company describes itself on its website as “an unlisted public company active in the acquisition, exploration and mining of metallurgical and thermal coal. Though it is a new entrant in the field of coal mining and exploration, LontohCoal has established a presence and reputation as an independent coal mining company with a portfolio of metallurgical and thermal coal properties in South Africa and Zimbabwe.”
In May it bought 51% of Liberation Mining Pvt Ltd in Zimbabwe, and it lists its major prospects and sites as Lubimbi and Entuba in Zimbabwe and in Hlobane and Lephalele in South Africa.
August 5th, 2010 by Tom Minney
The African Development Bank (www.afdb.org) joined investors into the New Africa Mining Fund II (NAMF II) equity fund investing in mining projects throughout Africa, especially Southern Africa. The bank announced on 19 July a $25 million equity stake. NAMF II aims to raise $100 million to $300 million.
According to the International Finance Corporation website (www.ifc.org), the IFC has approved a proposal for a $30 million investment in May.
According to the AfDB press release: “Like the first New Africa Mining Fund (NAMF I), this fund will focus on the upstream stages of the mining investment cycle where value creation is highest, i.e. primarily exploration and pre-development activities by junior and intermediate companies. The Fund will invest over 5 years and will have a life of 8 years.
“The role of mineral resources in Africa’s economic development is undisputed, particularly in the context of the favourable market outlook as a result of strong commodity demand. The African junior mining market remains capital constrained and unable to fully harvest prevailing opportunities. NAMF II therefore intends to mobilize capital for this sector in order to take advantage of the market potential. The Fund is targeting a net return in excess of 20%.
“From a development perspective, the Fund is expected to positively influence private sector development, create local permanent and short-term jobs, support balanced revenue sharing, increase government revenues (+$900 million per year), ensure compliance with environmental standards and promote transparency through the Extractive Industries Transparency Initiative (EITI). The Fund will be guided in its governance strategy by a comprehensive Governance Codex developed in collaboration with the AfDB.
“The Fund’s investment will facilitate growth and expansion in greenfield projects across the continent, thus developing African companies in the private sector and promoting growth in a sustainable manner through its Governance Codex and Environmental and Social Management System (ESMS).”
According to its website (www.newafricaminingfund.co.za), NAMF I raised about ZAR564 million ($77.8 milllion) of committed capital and invested in early- to later-stage junior exploration, mining and beneficiation activities (“junior miners”) in Africa, in resources such as base metals, platinum group metals, gold, coal and other bulk minerals such as iron, manganese and chromite. Its target companies offer high-quality management and have the potential to become substantial mining operations or to be acquired by larger mining operators.
NAMF I capital funded exploration, feasibility studies or development and expansion. Investors included ABSA bank, the Development Bank of Southern Africa, BHP Billiton, Goldfields, Industrial Development Corporation, IFC, Exxaro, Sanlam and Harmony.
According to the IFC, NAMF II is to be run by a joint venture of Decorum Capital Partners (Pty.) Ltd. and a black economic empowerment investor. “Through the involvement of a BEE partner, DCP aims to introduce Historically-Disadvantaged South Africans (HDSAs) into the management team, to broaden the team, develop a succession plan and potentially achieve compliance with South Africa’s BEE Code, as it applies to private equity funds”.
The target commodity focus will include base metals, gold, platinum group metals, coal and potentially other bulk minerals, where the medium-to-long-term industry fundamentals are attractive.
DCP claims its investment professionals “have proven private equity investment track records and are ready to respond quickly to new investment opportunities. The team skills mix has a bias to experienced exploration, mining, processing and beneficiation professionals and also includes investment banking skills.”
April 15th, 2010 by Tom Minney
Q Resources Plc (www.qresourcesplc.com) hopes to raise US$50 million-$100 mln through share sales in order to fund mining acquisitions in Africa, according to reports in Mining Review (www.miningreview.com), citing Bloomberg News. The Jersey-based company listed on the London Stock Exchange’s Alternative Investment Market (AIM) on 9 April after raising $4.6 mln.
According to the report, executive chairman Ivan Murphy told Bloomberg News in a telephone interview: “Q Resources seeks to make a sizeable acquisition in the coming couple of months.. The company plans to invest in iron ore, gold or uranium projects in Africa.”
Bloomberg reports that the company is focusing on deals in the Democratic Republic of Congo, the Central African Republic, Guinea and Mali. Gazprom Invest MENA will advise Q Resources on future transactions.
The company’s shares more than doubled in London at the end of last week, increasing 6.75 pence (10.5 US cents) to 12.75 pence (19.7 cents) and giving the company a market value of $10.8 mln.
According to the AIM announcement, Q Resources hopes to make a big acquisition, which would be deemed a “reverse takeover” and therefore require shareholders’ approval. After this it will be a holding company of an operating business and/or assets in the resources industry and it may make complementary or unrelated acquisitions in the sector. It aims to acquire and/or invest in up to 5 metals and/or minerals projects, but may also consider suitable acquisitions in the oil and gas sector. The company may also look in South America.
It aims to acquire operating – or close to operating – assets or licences but typically will not acquire other companies or early-stage operations or exploration activities. Q Resources intends to be an “active” rather than a “passive” investor, and will set up a management team for each project. It says it will be a value- and growth-oriented investor, targeting opportunities where it could add value through access to capital, contacts or by recruiting high quality personnel. “The Directors will aim to identify investment opportunities where the existing management and operational teams have the relevant experience and technical skills, but may lack the capital, financial experience or commercial acumen to maximise the potential of the target assets”, says the announcement.
April 9th, 2010 by Tom Minney
South Africa could be the centre of mining finance for Africa, according to Mick Davis, CEO of international mining company Xstrata (www.xstrata.com), as reported in the local Business Day (www.businessday.co.za) newspaper. However, he is reported to have told a business school audience that restrictions by the JSE Ltd stock exchange (www.jse.co.za) and remaining exchange controls made this almost impossible to achieve.
Africa contains some of the world’s richest untapped mineral deposits and could be the world’s next major copper- and cobalt-producing region. Mr Davis says that South Africa should allow free flow of funds in and out and scrap exchange controls completely if it wanted to attract foreign resources companies to the JSE.
Xstrata reportedly operates in 20 countries and is evaluating 20 new projects across the globe. It is listed in London and has 15% of its assets in South Africa, Mr Davis is described by the newspaper as “the maverick CEO who has built Xstrata into a major global resources player in just 8 years”.
According to the report, he said the commodities “super-cycle” was not over yet – but that if SA wanted to take full advantage this time, the government and mining industry had to work together to restore the mining industry’s competitiveness. He cited unstable transport and energy infrastructure, skills shortages and “constrained capacity” in regulatory bodies as factors that had prevented SA’s mining sector reaching its potential.
“The mining sector’s GDP (gross domestic product) contribution actually shrank by 1% during one of the greatest natural resource booms in history.”
The medium- term outlook for commodities remained very promising. Driving forces of the “secular change” in demand in recent years – industrialisation and urbanisation, particularly in China but also in India, Brazil and others – were still in place. However, the supply side remained fractured and the financial crisis has delayed many projects, making it more likely that the supply of certain commodities would fall significantly short of demand.
He also called for amendments to the regulations that prevent foreign-listed companies from enjoying full indexation on the JSE, saying without this there would be no liquidity in such companies’ shares, which would mean they would not be able to access capital in SA and so would not waste time or money listing on the JSE.
It is important for listed companies to be included in the FTSE/JSE indices so that funds that track the index are obliged to invest in their shares. Companies such as Anglo American, which moved its primary listing to London but retained a dual listing on the JSE, are included in the index. Newer entrants are not, such as British American Tobacco, which gained a secondary listing on the JSE in 2008. Xstrata has the fact that it cannot get indexed is a potential problem.
According to the newspaper, Mr Davis said major global players had operations across the globe and if there was uncertainty in one country about the regulatory, financial or political regime, investments would be diverted to another.
Security of energy supply was critical. Power utility Eskom should continue to be the major generator of power. However it was quicker and cheaper for resources companies to build their own generation capacity, all they needed was a credible price and the right regulation.