Inside Mining Focus In Africa Handbook July 2020

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Focus in Africa CEO Talk

A continent of challenges and opportunities

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Unearthing Africa’s vast potential

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• Waste management – avoiding contaminating the environment with mine waste

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FOR ADVERTISING RELATED QUERIES CONTACT: Amanda de Beer c +27 (0)72 600 9323 t +27 (0)87 802 5466 Amanda.Debeer@3smedia.co.za Chilomia van Wijk c +27 (0)83 963 1240 t +27 (0)11 233 2627 Chilomia.VanWijk@3smedia.co.za FOR EDITORIAL QUERIES CONTACT: MANAGING EDITOR: Dineo Phoshoko c +27 (0)83 768 8692 t +27 (0)11 233 2618 Dineo.Phoshoko@3smedia.co.za

THE FOCUS IN AFRICA ISSUE | 2020

CONTENTS FRONT MATTER Editor’s Comment......................................................................................................................... 2 Foreword........................................................................................................................................... 3

PROJECTS A gold discovery that makes a difference....................................................................... 5

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Unearthing Tanzania’s REE potential.................................................................................. 8 Pula’s Tanzania graphite project grains traction.........................................................10

CASE STUDY Innovating geophysics surveys in mining........................................................................12

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CEO TALK Executives discuss mining in Africa....................................................................................18 Resolute’s resilience in Africa.............................................................................................. 20 Expanding Africa’s platinum assets................................................................................... 22

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A rare peak for REEs................................................................................................................ 23

INVESTMENT & FINANCE Funding advice for the underestimated African mining sector.........................24

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LEGAL & BUSINESS How to seize opportunities in the African mining sector for mutual benefit..............................................................................................................................27 Understanding mining legislation....................................................................................... 30 Doing business in a post-Covid-19 Africa.....................................................................33 The legal complexities of mines operating in Africa.............................................. 35

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EDITOR’S COMMENT

What a time to be alive

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ocial distancing, wearing a mask, washing and sanitising hands regularly, as well as working from home are just a few aspects of society’s new normal. Previously, putting together an entire magazine without leaving the house to go interview someone or cover a mining-related event was unimaginable. But thanks to technology, the amazing 3S Media team and everyone who featured in this issue, we did it – it was not easy, but we did ourselves proud!

As cliché as it sounds, it is true that every cloud has a silver lining. Covid-19 has presented new opportunities for 3S Media and we will soon be enhancing our digital offering with the introduction of Mining News webinars. This platform is set to host thought-provoking discussions and hopefully help find solutions to problems faced by the mining industry. Constructive discussions hosted by our webinars will play an important role in helping the industry move forward.

This new offering will enable both Inside Mining and Mining News to tap into new audiences and new markets. For viewers, the webinars will give audiences an opportunity make their voices heard by participating through both prepared and live Q&As, surveys and polls,

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EDITOR Dineo Phoshoko HEAD OF DESIGN Beren Bauermeister CHIEF SUB-EDITOR Tristan Snijders CONTRIBUTORS Warren Beech, Shazelle Jeevaruthnam, Vusi Mabena, Wandisile Mandlana, Mametja Moshe, Analisa Ndebele, Nicolaas Steenkamp, Jonathan Veeran PRODUCTION MANAGER Antois-Leigh Nepgen PRODUCTION COORDINATOR Jacqueline Modise GROUP SALES MANAGER Chilomia Van Wijk BOOKKEEPER Tonya Hebenton DISTRIBUTION MANAGER Nomsa Masina DISTRIBUTION COORDINATOR Asha Pursotham SUBSCRIPTIONS subs@3smedia.co.za PRINTERS Novus Print Montague Gardens |+27 (0)21 550 2300

among others. For advertisers, the webinars are a great platform to promote their products and services, as well as increase brand awareness in the industry.

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There is no doubt that many industries – including our own – have been hard hit by the Covid-19 pandemic.

However, it has also unlocked new opportunities for us, which we intend to exploit fully. We are excited to embark on this journey and look forward to producing quality content in print and via our digital platforms.

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THE FOCUS IN AFRICA ISSUE | 2020

FOREWORD

Mining in the SADC region The SADC region is endowed with myriad mineral resources that are currently being exploited and more that are yet to be mined. By Vusi Mabena* Vusi Mabena believes that value chains also need to be competitive enough to enable the mining industry to compete globally

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he success or failure of mining these resources is, among others, dependent on the policy and legislative frameworks that the different governments in the region are pursuing. Apart from the legislative framework, investment and cost-effective mining are also critical to success.

The region is mining within a global context where there are other mining jurisdictions who are all scrambling for limited investors who have the appetite to invest in exploration and mining. Costcompetitiveness, therefore, is also an important consideration to guarantee that mining in the SADC region attracts the right investors and is able to compete in the global market.

Africa has adopted the Africa Mining Vision (AMV) through the African Union and has left it to the different African regions to apply it in a way that best suits regional conditions and that will ensure sustainability and the prosperity of Africa and its communities.

The SADC region, through the leadership of the SADC secretariat, has taken the lead in domesticating the AMV by drafting and adopting its own Regional Mining Vision (RMV), crafted from the key principles of the AMV. The RMV was adopted in August 2019 at the Summit of the Heads of State of the SADC region. The adoption of the RMV by

the heads of state is a demonstration of political willingness to ensure that mining and its regional value chains are prosperous in the SADC region.

The challenge remains the actual domestication of the RMV at country level.

An RMV is a sensible thing to have if all countries agree to it and make sure that policies and legislation at country level are aligned to it. When the RMV is launched, it finds countries at different stages or levels with regard to their mining policy and legislation. It then becomes a challenge for a country to realign itself to the RMV. Another major challenge is Governments in the that countries, as independent jurisdictions, drive certain strategies region need to create that are competitive for that country the environment for the and thus make it difficult to adjust industry to be attractive its competitive edge to ensure that for both local and it supports other countries in the region. Another major challenge international investment with the alignment of the RMV is that countries are not always at the same level with their mining trajectory.

A key aspect of mining that is high on the agenda of most mining jurisdictions in the region is transformation, which is characterised differently in different countries. Some countries have a legislated mining charter, which contains

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FOREWORD such elements as: ownership, localisation, socioeconomic development, among others. Successful implementation of such policies and legislation at country level depends on the following conditions for each of the critical elements: • Successful transformation of mining ownership depends on the readiness of local investors to invest in mining, as well as the freedom to disinvest as and when they want. This is usually very difficult in a long-term-driven industry before one can reap the benefits of such investments. Ownership by local investors becomes difficult in economies that are not growing.

• The core competence of mining companies is the extraction of raw commodities from the ground. Sometimes, policies related to localisation tend to stretch mining companies beyond their competencies and capabilities, especially in times when demand for commodities is low globally and companies are implementing cost-saving measures.

Sometimes, localisation becomes a challenge in countries that are highly dependent on imported machinery and other products. This leaves the key stakeholders in the mining industry to explore ways of promoting localisation in a way that will not be detrimental to the mining industry.

• The mining industry is often accused of environmental degradation and the destruction of communities. For these reasons, the mining industry is under pressure to implement Socio-economic development strategies for its communities. The mining industry in the SADC is subscribing to the concept of ‘Responsible Mining’,

which ensures that the environment is always rehabilitated and communities are supported with sustainable socio-economic initiatives.

The RMV has identified value chains as the key driver of the growth and sustainability of the mining sector in the SADC. The mining sector, together with governments in the region, must work hard to create a conducive environment for the industry to successfully implement value chains without compromising the sovereignty of each state and ensure that all participating countries benefit equally from the value chains. Value chains also need to be competitive enough to enable the mining industry to compete globally.

Linked to value chains is the appropriate infrastructure to enable the easy movement of commodities from one country to next in the region. The region also needs to be ready with the necessary machinery, technology and electricity supply. Governments must be ready to invest in this infrastructure in partnership with other related industries that form part of the value chains.

Mining in the SADC region remains strategically well positioned to provide such commodities as base metals, ferro-metals and precious metals, which are always in demand in the global market. The industry needs to be well positioned to be able to take advantage of the global commodity boom and benefit the region.

Governments in the region need to create the environment for the industry to be attractive for both local and international investment. Life in general is heavily dependent on mining products and the SADC region holds all these life-dependent commodities. It is up the key stakeholders to make sure that mining and the region take advantage and benefit from them. *Vusi Mabena is the executive secretary of the Mining Industry Association of Southern Africa (MIASA).

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THE FOCUS IN AFRICA ISSUE | 2020

PROJECTS

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A gold discovery

xperienced geologist Peter Ledwidge and his team have made five discoveries in West Africa, including the Napié Project. Located in the northern parts of Ivory Coast, test results from drilling programmes look promising.

Ledwidge is the managing director of Mako Gold, an exploration company responsible for the Napié Project.

Speaking to Inside Mining via Zoom, Ledwidge shares that the company had another project for which it announced a discovery in January 2019 – the Niou Project. Located in Burkina Faso, the project saw the signing of a sale agreement in May 2020 to Nordgold.

Ledwidge explains that the reason for selling the project was so that the team could focus fully on the Napié Project.

Project in detail From north to south, the project is 30 km long, with four prospects identified. The prospects are Gogbala,

that makes a

difference Some of the biggest gold producing mines are found in West Africa. The gold mineral potential in the region is massive, with unexplored gold deposits situated in various countries across the region.

By Dineo Phoshoko Tchaga, Tchaga East and Tchaga North. Ledwidge explains that 75 holes had already been drilled in the Tchaga prospect, with plans to finance additional drilling, which would take the project to resource stage.

Mako recently announced a heavily oversubscribed US$3.25 million (R53.41 million) capital raise.

With wide intercepts and a good grade, drilling results from the Tchaga prospect were looking good.

Some of the results showed 18 m at 3.25 g/t Au from 39 m, 25 m at 3.43 g/t Au from 53 m, and 36 m at 3.09 g/t Au from 43 m. “We are getting those numbers along strike 1.4 km, so there’s really good If you do things potential just on that,” explains Ledwidge.

Prior to Covid-19, the estimated time frame ethically, you are for the project to yield resources was in actually doing something Q4 2020. “In Q1 2021, we realistically think good, especially if you we can come out with the resources on that.” Despite the delays as a result of the are working in a pandemic, the project remains on track. developing country.”

Preliminary metallurgical work has already been done and results show that both fresh rock and sulfide came back at over 94%. “That’s another box ticked as far as derisking the project goes,” adds Ledwidge.

Mineralisation had been tested up to 120 m. “On this last diamond drill programme, we confirmed it now to 185 m.” Ledwidge was also satisfied with the mineralisation, saying that it was consistent during the drilling programme. In fact, the first two drill programmes had 24 holes with impressive intercepts.

To date, five drilling programmes have taken place.

A map showing the Napié “Once we outline a resource on the Tchaga Project, Project with four prospects

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PROJECTS we’ll travel 6 km to the south to start drilling on the other prospects,” Ledwidge says.

The project is currently in the early exploration stage and Mako Gold is in possession of permits that enables the company to continue its drilling programme.

According to Ledwidge, the next step is to get the project to yield a resource.

Working in Africa can be very challenging at times, but Ledwidge maintains that he and his team did not experience the typical problems associated with working in Africa. “We’ve got a really good relationship at all levels – from the minister of mines all the way to the people on the ground,” he says. He also adds that as a country, Ivory Coast is very supportive of explorers so long as they operated correctly.

A big part of doing things correctly included communicating with the local community as well as constantly being in touch with all levels of government in the host country. “We’ve got a really good relationship with them.” Ledwidge emphasises that, when everything is done right, working in Ivory Coast is not problematic.

“The only challenge right now is Covid-19. We’ve taken a break from drilling but are now satisfied that we can resume our drilling operations with a robust Covid-19 plan in place. He also dispels the common idea that some people have about working in developing countries in Africa. “To be honest, Ivory Coast is very well developed and is easy to operate in.”

The team working on the Napié Project

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The team and stakeholders Mako Gold is listed on the Australian Securities Exchange (ASX) and went public in 2018. There are several stakeholders involved in the company as well

as the Napié Project. Resolute Mining (ASX/LSE:RSG) is a shareholder in the company, with a 13% stake. In addition, the company also has a joint venture with Perseus Mining (ASX:PRU).

On the project itself, Geodrill (TSX:GEO) was involved quite a lot, especially during the drilling programmes. The Napié team is led by highly experienced individuals who have lots of exploration and geology experience.

Ledwidge himself is a geologist by profession, with 30 years’ experience in mining and exploration. Also part of the team are his wife, Ann Ledwidge, who is Mako Gold’s exploration general manager, and Ibrahim Bondo, the country manager – both are highly experienced, with 45 years’ experience between them.

Ledwidge, his wife and Bondo were once colleagues at Orbis Gold before founding Mako Gold.

Ledwidge believes that things are progressing well and attributes the success thus far to the team’s hard work and dedication. “We had made three discoveries in two years in Burkina Faso with Orbis Gold (ASX:OBS) and have already made two discoveries with Mako since listing on the ASX in 2018. Our company is good at finding deposits. We’ve proven in the past that we can do that.” Another crucial aspect of success is the good relationship between the team and the stakeholders.

Dealing with Covid-19 Like many businesses across different sectors, the worldwide Covid-19 pandemic has had a negative impact on the mining industry. “As soon as Covid-19 hit, our share price took a tumble,” explains Ledwidge.

The share price has since recovered.

In addition to the share price, the novel coronavirus also affected the project, as the team had to stop drilling. Ledwidge explains that despite adhering to health and safety measures, as a junior company, Mako Gold does not have the resources to control the spread of the virus when compared to bigger companies. His biggest worry has been the health and well-being of the staff.

“I’m not criticising the people that are carrying on with programmes; I’m just saying that we prefer to take extra caution,” he adds. The situation would be far worse for employees and the company itself if there were incidents of reported Covid-19 cases on-site.

Ledwidge is impressed with the manner in which the Ivorian government has dealt with the virus, saying that Abidjan – the largest city and economic capital of Ivory Coast – was placed on lockdown very early on. As a port city, it is a hive of activity.

“By sealing off that city, I think they did really well,” Ledwidge says. Only people categorised as working

THE FOCUS IN AFRICA ISSUE | 2020

PROJECTS

Drilling taking place on-site

for essential services could get in and out of Abidjan.

Other restrictions in Ivory Coast were put in place to limit people’s movement.

Undoubtedly the Covid-19 pandemic will negatively impact on the mining industry and related activities; however, Ledwidge is optimistic that, with time, the situation is bound to improve. “We are actually gearing up to restart drilling again pretty soon.”

Drilling samples are placed into plastic bags for testing

Leaving a lasting impact Ledwidge feels that being a CEO of a listed company comes with many responsibilities, one of them being keeping a lot of people happy. The people include locals in villages close to the site, people in the ministry, employees, and other stakeholders. “You have to come up with something that will achieve that and the way to do that is work in an ethical fashion.”

His vision for Mako Gold’s Napié Project is that it gets taken over by another company that will put the project into production. “It would have to be a company that’s well established and does things right, so that it is going to be beneficial for the people.”

In the bigger scheme of things, the project has the potential to make a significant contribution to the development of a country in different areas such as education, infrastructure and sustainability.

Ledwidge himself finds fulfilment in FOLLOW THE LINK seeing people’s lives improve on the ground. “If you do things ethically, you are Read the full story: actually doing something good, especially miningnews.co.za/2020/07/28/ a-gold-discovery-that-makesif you are working in a developing country. a-difference The level of change you are going to bring by being successful at finding and establishing a mine is going to help the local community and the country,” he concludes.

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PROJECTS

Unearthing TANZANIA’S REE POTENTIAL From smar tphones to computer monitors and digital cameras, many sophisticated technological devices like these contain rare ear th elements (REEs). And the constant improvement in technological innovations means that the demand for REEs will increase, which is good news for current and future rare ear th projects.

By Dineo Phoshoko

A

ustralian Securities Exchange (ASX) listed Peak Resources is expected to become a big player in the supply of REEs with its flagship Ngualla Project.

Ngualla is one of the world’s largest and highest-grade undeveloped neodymium (Nd) and praseodymium (Pr) rare earth projects.

Located in southern Tanzania, the Ngualla Rare Earth Project is centred on the Ngualla Carbonatite. Ngualla is a Swahili word that translates to ‘bald head’ and is a reflection of the hill in the area where the project is located.

Rocky Smith, CEO of Peak Resources, explains to Inside Mining that the company had pursued the project because Ngualla’s favourable metallurgy enables a low-cost process, creating a competitive advantage over its peers. “The project has the potential to become generational, providing sustainable benefits to the local community and wider region over the long term,” Smith says.

The Ngualla ore resource has the potential to produce 214.4 Mt at 2.15% REO

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The Weathered Bastnaesite Zone that is the target for development occurs as a thick blanket of high-grade rare earth mineralisation from the surface on the Ngualla Hill. Rare earths are contained within the mineral bastnaesite within a weathered host rock that contains very low levels of phosphate, carbonate, uranium and thorium compared to other rare earth deposits. This makes it easy to mine by low-strip-ratio open-pit techniques and it is subsequently upgraded to a high-grade processed concentrate through a multistage processing plant on-site.

Ngualla is also host to widespread, high-grade niobium-tantalum, phosphate, fluorspar and barite mineralisation. These additional commodities are at an early stage of evaluation and represent potential upside opportunities for additional products from the project.

Supply and demand of REEs According to an article published by the United States Geological Survey, REEs are essential raw materials in the production of high-tech products.

“REEs (NdPr) are the core components used within the permanent magnet market (wind turbines, electric vehicle motors and military applications), meaning there are no substitutes without sacrificing quality and performance,” adds Smith.

The article, entitled ‘The Rare-Earth Elements – Vital to Modern Technologies and Lifestyles’, also explains that China used to be the dominant supplier of rare earths across the world, accounting for 95% of the global market. Concerns around the environmental effects of mining as well as preserving the rare earths reserves for domestic requirements has resulted in China restricting its supply of REEs internationally. This has paved the way for rare earth exploration projects outside of China.

From as early as 2000, there was a substantial increase in the exploration of rare earths deposits globally. The article notes that more than 400 projects were in progress in 2012, with some in advanced stages of exploration. With the rapid rate

THE FOCUS IN AFRICA ISSUE | 2020

PROJECTS

Layout of the industrial park at the UK REE refinery

of technological innovation, the demand for rare earths is expected to increase.

Progressive partnerships The ore reserve estimate for the Ngualla Project is 18.5 million tonnes at 4.80% rare earth oxides (REO) for 887 000 tonnes of contained REO. Although this is just 22% of the total mineral resource, the reserves are enough to support a 26-year life of mine. Peak Resources plans to export approximately 32 700 tonnes per annum of rare earth concentrate grading 45% REO from Tanzania to its UK refinery.

Existing transport infrastructure – together with a low-tonnage, high-value product – will enable costeffective transport from Ngualla to the deep-water port in Dar es Salaam, and from there to the UK. Smith explains that the feasibility study has been completed with the company waiting for the mining permit. “This is the final approval before we look to progress project financing ahead of commencement of construction.” Once Peak Resources is granted with the special mining licence and construction commences, only then can an expected date of completion can be estimated.

While the project has been making steady progress, it has not been without challenges. “We have been delayed due to the protracted nature of the mining permit application process in Tanzania. This stemmed from various changes to the mining legislation in Tanzania in mid-2017 – around the same time we submitted the mining licence application,” Smith explains. He adds that this has resulted in the project’s

investors and potential financiers becoming concerned because of the time it is taking for the Tanzanian government to implement the new legislation.

In his view, dealing with these challenges has required patience and the belief that the process and effort put in will become fruitful, both for the company and Tanzania. “We are fortunate that the mining industry and its challenges are well understood by investors in Australia and that they have supported us over the long term.”

Appian Capital Advisory was also involved in the project. Smith explains that Appian is a long-term private equity fund that was established to invest specifically in the metals and mining sector. The International Finance Corporation (IFC) is another stakeholder involved in the project. The IFC is a member of the World Bank Group and is the largest global development The project has the institution focused exclusively on the potential to become private sector. As an ASX-listed start-up generational, providing business, Peak Resources has various shareholders involved in the project. sustainable benefits to the Once Peak Resources is granted the local community and wider mining licence and construction region over the long term.” proceeds, it will be a matter of time before the Ngualla Project becomes a successful mine, which will become a significant player in the global REEs market. “We are thankful to have long-term and supportive investors who also believe in what we have set out to achieve with the Ngualla Project,” Smith concludes.

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PROJECTS

Pula’s Tanzania graphite project grains traction

L-R: PGP geological team on-site at the Ruangwa: Efraim Hermann, Yusuph Karim and Pula VP Dr Mary Stith

Tanzania hosts world-class graphite deposits and The Pula Group aims to take the lead and social responsibility as project developers.

By Nicolaas Steenkamp

T

he Pula Group is in the process of developing four tenements in Tanzania, hosting jumbo graphite flake deposits. The exceptional quality of the graphite is expected to make the project attractive despite the current oversupply and lower demand.

With a world-class graphite project in Tanzania, East Africa, US-based The Pula Group is committed to a green future.

Graphite is critical to reducing emissions through e-vehicles and other green technology. Graphite is also used to produce graphene, the thinnest, strongest and lightest identified material, which is driving innovation in the health and aerospace sectors.

Along with the high calibre of its Tanzanian graphite opportunity, The Pula Group is setting high ethical standards in the mining sector. The Group’s subsidiary for developing the project is Pula Graphite Partners (PGP), a 50-50 joint venture with local strategic partners. Even during the exploration phase, PGP already has a superior track record of philanthropy, which includes outfitting a youth soccer team, providing emergency food relief for flood victims, and supplying PPE for the health sector in the coastal Ruangwa District, where the four graphite tenements are located.

The high-quality graphite mineralisation includes jumbo flakes developed to a depth of 60 m, a key driver ensuring the project economics are strong. PGP is taking a modular approach to mining and processing graphite – an innovative and efficient approach to optimise the success of the project

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during the ramp-up phase. The phased plan commences with a mini-plant processing facility that produces 15 000 tonnes of concentrate in the first year.

Using the ‘Mine-in-the-box’ concept developed by South African mining consulting group Bowline Professional Services, the mine can be scaled up with ease to the full capacity of 80 000 tonnes per year. This adaptive approach to mining helps mitigate economic risks and the ‘too big to fail’ attitude that has sunk many large-scale mining projects. The PGP model provides a clear way to reignite the capacity for junior mining companies to activate the sector with minimal risk and maximum benefit to communities.

In addition to the quality of the graphite, business model and corporate ethic, the project logistics also aid in distinguishing PGP. The site is located 220 km from the deep-water port of Mtwara, enabling the concentrate to be transported reliably to meet delivery dates. Reliable power and water are a challenge to remote projects, but PGP has been able to identify innovative solutions. As a long-term sustainable development solution, Pula plans to execute a grid power agreement to deliver a third-party, build-own-operate solution. Water will be extracted from a seasonal river and wells, and stored in environmentally friendly containers. PGP’s motto – ‘doing well, while doing good’ – reflects a deep corporate commitment to mining as a positive engine of change in Africa, and the project builds and enhances infrastructure for local development.

Project history After careful consideration and studies of high-potential mining investments, The Pula Group identified the graphite deposits in Tanzania as having the highest potential. PGP’s licences are located in an area known to be highly prospective for graphite in the south-east quadrant of Tanzania. The country has a stable, democratic regime and is endowed with abundant natural resources.

In order to further stabilise the mining sector, the Tanzanian government has developed and implemented a fully comprehensive package of mining legislation, which emphasises local beneficiation and industrialisation. Key regulations include the 2010 Mining Act and Regulations, the Tanzania Extractive Industries Transparency Accountability Act 2015, the Finance Act of 2017, and the Mining Commission Guideline for Submission of Local Content Plan 2018.

Tanzania’s deposits are considered among the best in the world and the country is poised to be a global leader in graphite production. This has been confirmed and promoted as part of Pula’s investment and exploration programme,

which commenced in 2015. Site work has entailed surface mapping and a drilling programme to delineate the deposits and generate the initial block models. The NI43-101 compliant ‘Competent Persons Report’ was compiled by Germany-based DMT Kai Batla. The report highlights some of the outstanding features of the project deposits: • an estimated 34.7 million tonnes of indicated resource and 62 million tonnes of inferred resource • at least 11 million tonnes of the indicated resource with 9.5% total graphitic carbon (TGC) and 21 million tonnes of the inferred resource with 8.9% TGC • mineralogical test work indicated 70% of the natural graphite flake sizes ranges between medium and super jumbo – i.e. 300 to 500 microns, which commands US$950 to $1 900 (R15 740 to R31 480) per tonne at the time of writing • net present value (NPV) of ≈$330 million (≈R5.5 billion).

Looking forward PGP continues to burnish its image as an innovative and committed corporate citizen that can weather shifts in the market.

The Pula Group’s optimism in the graphite market is based on the favourable outlook where graphite is considered critical to the green economy, which is poised to stimulate economic recovery post Covid-19.

It is considered a low-cost, non-Chinese-controlled resource of strategic importance. The modular approach is a nimble response to economic and health issues related to scale and the issues (volatility) with oil prices highlight potential demand and subsidies for electric vehicles.

At present, PGP is laying the foundation for the next important project milestone: bulk sampling and testing in order to finalise the processing and flow design for the mini plant to be constructed during Phase 1. In anticipation of an uptick in the economy in Q1 2021, PGP is focusing on securing forward-thinking investment partners, off-take agreements, and the completion of the environmental impact assessment.

In closing “The current coronavirus crisis aside, the Pula team is very optimistic about the future. The greening of the global economy is the 21st century reality. One example of the forward movement is a proposal by Chuck Schumer of the US Senate to invest $454 billion (R7.52 trillion) to facilitate America’s transition to e-vehicles. This will not only drive demand in the American market; we anticipate that it will accelerate the transition to e-vehicles worldwide. We like how we’re positioned.

We look forward to being a lead player in the green revolution,” comments Ambassador Charles Stith, chairman of The Pula Group.

The viability of the PGP graphite opportunity in Tanzania rests on its social licence to operate and the centrality of graphite to the present and future economy. The US and EU have designated graphite as a strategic mineral that is critical to their respective economies and security. PGP aims to develop a new mining model for Africa that links global demand, local beneficiation and national development.

Minerals that aid the greening of the economy, such as graphite, are opportunities to create a more sustainable and ethical mining sector and global future. In that respect, Tanzania is a critical player; its mineral wealth and development needs new standards of resource extraction, which can be provided by young, agile, and ethical companies such as PGP.

WEBINAR

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Our webinars will feature panelists from various areas of the mining sector, all of whom are subject-matter experts in their field.

Topics discussed in the webinars will provide audiences with insight into industry challenges and how these might be resolved or turned into business opportunities.

To maximise audience participation, viewers will be able to interact with our panelists by posing questions and providing feedback through live polling and Q&As.

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CASE STUDY

Innovating geophysics surveys in mining

Geophysical surveys are crucial in mineral exploration activities, as they give detailed information about the mineral potential of a geographical area. Over the years, the way in which geophysical surveys are conducted has improved significantly, making it possible for efficient and accurate results. By Dineo Phoshoko

D Specialist aircraft are used for geophysical surveys. They fly low and slow to improve data quality, and in this example carry magnetic sensors in wingtip pods (Credit: Reid Geophysics)

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uring 2019, Reid Geophysics collaborated with Sierra Leone’s Ministry of Mines and Mineral Resources, along with the National Minerals Agency, to commission the nationwide airborne geophysical survey.

Speaking to Inside Mining, Tim Archer, managing director of Reid Geophysics, explains that the main objective of the nationwide survey is to obtain integrated geophysical data that will form the basis for a review of the country’s geology and mineral resources and their distribution. “The ultimate goal is to gain improved knowledge of the quantity and distribution of the country’s mineral resources so as to ensure their sustainable exploitation in future,” he says.

Archer explains that the survey was conducted in Sierra Leone because the country has a long history of mining commodities and is home to various minerals, including diamonds, gold, iron ore, rutile and bauxite. “The government now wants to attract further international mining investment, and has secured funding from the World Bank for a nationwide airborne geophysical survey.”

The survey was unique in that more than 543 000 line km of magnetic and radiometric data was collected. The data was collected at a flight line spacing of 150 m and a nominal terrain clearance (subject to safety constraints) of 50 m. “As far as we are aware, this is the highest-resolution nationwide dataset ever collected,” Archer said.

Another important aspect of the survey is that a customised aircraft was used to conduct the actual survey. The aircraft had eye-level navigation display and wingtip magnetic sensors. In addition, the aircraft also had high-volume radiometric crystals.

Survey advantages and limitations Conducting an airborne geophysics survey has major advantages. Archer explains that airborne geophysics is a rapid and cost-effective means of surveying large areas of ground for mineral exploration. “The survey model adopted in Sierra Leone can be successfully applied to other African countries, to map mineral resources and attract foreign investment,” he adds.

At the 2020 Investing in African Mining Indaba, a

THE FOCUS IN AFRICA ISSUE | 2020

CASE STUDY case study was presented about Sierra Leone, titled ‘The New Direction for Sierra Leone’s Mining Sector’.

Speakers during the presentation were Archer, Sierra Leone’s Minister of Mines and Mineral Resources, Foday Rado Yokie, as well as the country’s director: Geological Survey at the National Minerals Agency, Prince Cuffey. The presentation was also attended by the President of Sierra Leone, His Excellency Julius Maada Bio. With reference to the geophysical survey, the minister mentioned that geodata was crucial to targeted exploitation activities that produce highvalue resources with minimal expenditure within a reasonable timeframe. “The flagship achievement of the Ministry of Mines and Mineral Resources – which is the completion of the nationwide airborne geophysical survey – has uniquely positioned the government of President Julius Maada Bio to present Sierra Leone as a competitive destination for mining operations by ensuring that we have accurate geodata.”

Although the survey was not conclusive in directly locating mineral deposits, Yokie said it was beneficial because it contributed to the interpretation of resource and geochemical mapping activities that will secure accurate geographical data on Sierra Leone’s mineralisation.

Archer emphasised that the survey collects geophysical data, which needs to be interpreted by experienced geoscientists familiar with the airborne technology as well as the local geology. “It is not X-ray vision,” he highlighted.

Sierra Leone’s mining sector In his opening address of the presentation at Mining Indaba 2020, Yokie mentioned that the country’s mining sector, as well as its development, was crucial to realising the vision of transformation and development. He also proudly highlighted that President Bio – who was in the audience – was the first sitting president of Sierra Leone to attend Mining Indaba, which took place in February 2020 at the Cape Town International Convention Centre.

Yokie asserted that the president’s attendance was a testament to enduring commitment to showcase the competitiveness of the mineral market and attracting investment to the country.

“The government of Sierra Leone, under the leadership of President Bio, is keen to unleash the potential of the mining sector in Sierra Leone as

the key driver of the economic boost and poverty reduction,” Yokie said. One of the ways to achieve this would be through deliberate and targeted decisionmaking processes that consider the mitigation of environmental and social impacts inherent in mineral extraction.

Yokie highlighted the importance of creating a fair and competitive environment for the country, companies and communities. Furthermore, he added that reforms need to bring predictable operational obligations for all mineral rights holders, as well as enhance the capacity of the state to protect all investments. “[It is important to] ensure that all stakeholders, private investors, government and communities directly impacted by mining operations

Prince Cuffey (left), director of the Geological Survey, and Julius Mattai, director general of the National Minerals Agency, representing Sierra Leone at Mining Indaba 2020 (Credit: National Minerals Agency)

get a fair deal and a fair share from investment benefits,” Yokie said.

He concluded by expressing gratitude to the World Bank for its support during the survey and other critical projects in Sierra Leone’s mining sector. “The World Bank continues to be a strong partner for the Ministry of Mines and Mineral Resources. We value this partnership that has proven to be mutually beneficial to all.”

Geological potential Geophysics helps to provide a better understanding of the geology of a survey area. So, after Yokie’s opening, Cuffey took to the stage to provide insight into the country’s geology and mineral potential.

Several minerals have been found in Sierra Leone’s geology. These include diamonds, platinum, bauxite, rutile, gold, iron ore and lignite. The minerals are found across the country in various mineral belts and

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CASE STUDY A map showing Sierra Leone’s mineral potential (Credit: National Minerals Agency)

As far as we are aware, this is the highest-resolution nationwide dataset ever collected.”

Tim Archer, managing director of Reid Geophysics

complexes. Cuffey explained that the Freetown Layered Igneous Complex has potential for platinum and bauxite. “We have reason to believe that it also has nickel, copper and gold associated with sulfides.”

The Freetown Complex has an area of 430 km2.

With regard to the bauxite deposits in the Kasila Group, Cuffey referred to two deposits – Port Loko and Gondama. Port Loko is still in development and has approximately 77 million tonnes of bauxite.

Gondama is an existing mine operated by FOLLOW THE LINK Vimetco with 31 million tonnes of bauxite.

With an area of 8 900 km2, the Bullom Group Read the full story: along the coast has coal potential, as well as miningnews.co.za/2020/07/28/ innovating-geophysicsother minerals including lignite and rutile. The surveys-in-mining/ Kasila Group has an area of 6 600 km2.

Information on the Sierra Leone Ministry of Mines and Mineral Resources website states that the Kasila Group comprises a high-grade series of granulites, consisting of garnet, hypersthene and

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hornblende gneisses, quartzites and associated migmatites.

Cuffey emphasised that the Kasila Group was very important, as it is the primary source of rutile in Sierra Leone. “It actually has one of the largest rutile deposits in the world,” he said. It is estimated that the Kasila Group has 867 million tonnes of rutile deposits. “We have also issued a series of small-scale mining licences for rutile lately.”

At 720 km2, the Marampa Group – which forms part of the greenstone belt – could potentially be a good source for iron ore. Cuffey explained that deposits in the Marampa Group in excess of 1.68 billion tonnes had been identified.

Sierra Leone has vast iron ore deposits, with billions of tonnes in cumulative resources.

“What is important to know is that most of these on the greenstone belt equally have the potential for iron ore, but we need to put exploration efforts into them,” Cuffey said.

The Rokel River Group consists of an assemblage of sedimentary rocks. With an area of 7 350 km2, this group has significant potential for bauxite.

Most of Sierra Leone’s geological potential is found in the granite-greenstone terrain, which makes up 47 000 km2 of the country’s geological potential (65% to 70%). “It’s important because that’s where our kimberlites are emplaced,” Cuffey said. Koidu, Meya and Tongo-Tonguma kimberlite deposits have been identified and they have approximately 17.54 million carats combined. Cuffey added that the Tongo kimberlite is one of the highest-value kimberlites in the world in terms of US dollars per tonne.

The nationwide airborne geophysical survey could potentially change and improve the way geophysical data is collected in the mining industry.

Archer concluded his presentation by saying that an important component of this survey was the transfer of specialist technical knowledge to staff of the National Minerals Agency (NMA).

“The NMA has taken a keen interest in this project, and is now well equipped to manage its technical benefits for mineral explorers and the people of Sierra Leone.”

PROFILE

Mineworkers Provident Fund (MWPF) has in the past 31 years ensured the financial well-being of mineworkers and their dependants from all corners of South Africa and certain SADC countries.

Our members, our priority

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ntrenched in its values of dignity, legacy and respect, the business has framed its intention to provide members with a better future and create generational value for years to come.

MWPF outperforms competitors The Fund continues to outperform all industry peers (with the same investment objectives) over 3, 5 and 10 years, respectively. The Fund also stacks up favourably over one year, as it remains in the top three funds when compared to peers.

“Members are at the centre of everything we do. We create value for members by protecting the purchasing power of their retirement benefits into the future. Through astute investments, we deliver returns above inflation safeguarded by appropriate risk levels,” explains Dumisa Hlatshwayo, CEO of MWPF. Superior benefits A unique investment approach is not the only thing that sets the Fund apart. MWPF offers superior products to its members, ensuring that beneficiaries are well taken care of should their members no longer be able to do so themselves.

• Funeral benefit: The MWPF funeral benefit pays out R40 000 to the member, spouse (regardless of the number) and children aged 14 to 25 (21 to 25, proof of study will be required); R25 000 to children aged 6 to 13 and R15 000 to children younger than 1 to 5 years; and R40 000 to retired members.

• Death benefit: The death benefit pays out the full fund credit and three times annual salary.

• Retirement benefit: This benefit pays out the full fund credit.

• Disability benefit: The disability benefit pays out the full fund credit plus three times annual salary (if approved).

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Income for Life As it is MWPF’s aim to create a better future for all its members, the Income for Life product offers a guaranteed monthly income to members for the rest of their lives after retirement. If a member dies 10 years after they retire, their nominated beneficiary/beneficiaries will receive a lump sum equal to the value of the remaining income payments.

Through this benefit, MWPF hopes to make a significant impact on the lives of its members by preventing the temptation of cashing out all their savings at retirement and leaving them dependent only on government grants, which are often not enough to sustain an entire family.

Member engagement Beyond offering financial security, proactive engagement with members is key. “Going beyond our call of duty is something we believe in and we provide numerous engagement platforms for members to interact with us on a continuous basis,” adds Hlatshwayo.

MWPF has member education roadshows conducted by its client relationship managers at all employers within the MWPF database, as well as benefits counsellors to help members choose the suitable retirement options. In addition, MWPF has various walk-in centres and employerbased servicing consultants across South Africa to assist members and beneficiaries with any queries they might have. The Fund is available to assist even during lockdown and can be contacted on the contact details provided.

“Thirty-one years of putting our members first, our commitment is even stronger than before and our efforts going into the future will be focused on surpassing the current status quo as we forge ahead and create better opportunities for our members,” concludes Hlatshwayo. +27 (0)10 100 3001

@mineworkerpf

www.mwpf.co.za

@mineworkerpf

CEO TALK

Executives discuss mining in Africa

An extraordinary amount of work goes into operating a successful mine. Dineo Phoshoko speaks to executives from five mining companies with operations across Africa to discuss what makes working on the continent unique, what the challenges are, and the impact of Covid-19, among others.

Cobus Loots is the CEO of Pan African Resources

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frica’s geological potential has made the continent an attractive location for the development of mines.

The continent is home to a variety of minerals in high demand across the world.

Pan African Resources Pan African Resources is a mid-tier Africafocused gold producer with a production capacity in excess of 170 000 oz of gold per annum. The company owns and operates a portfolio of high-quality, low-cost

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operations and projects located in South Africa. CEO Cobus Loots speaks.

In your view, what makes mining in Africa different compared to the rest of the world?

Cobus Loots Mining in South Africa is better positioned than in many other parts of the continent, given the availability of electricity, infrastructure, and mining support industries.

However, our mines are more labour-intensive and less suited to mechanised mining when compared with other countries. This has a bearing on productivity and costs of production.

What would you say is the most challenging thing about operating in Africa?

Currently, all of Pan African Resources’ operations are located in South Africa, namely in the Barberton and

THE FOCUS IN AFRICA ISSUE | 2020

CEO TALK Evander areas, both in Mpumalanga. These areas are historical mining districts and have well-developed infrastructure (roads, electricity, fuel supply, rail) as well as the availability of skilled and unskilled labour.

Mining presents a number of challenges, including keeping our people safe in what are sometimes difficult conditions, and dealing with all of our stakeholders.

How do you deal with these challenges?

Mining is ultimately about people, having the right people, and ensuring all of our people share our purpose and vision. In terms of safety, we have a hands-on approach. It is critical that individuals take responsibility for their own safety, with the company providing all of the necessary training, equipment, and policies/procedures.

When dealing with stakeholders and communities, it is important to be honest and sincere, and to resolve issues in a transparent and proactive manner.

We are proud of the fact that Pan African’s mining operations are able to make a meaningful and positive difference in the lives of all of our stakeholders.

In terms of your mining operations, what would you say Pan African is doing well and what could you improve on?

The restrictions and conditions required to operate in terms of the Covid-19 national lockdown regulations will have some effect on production for the year. However, our management team has been particularly successful in repositioning and optimising our operations. At the Evander operations, we have curtailed our high-cost and logistically challenging deep underground operations to focus on pillar mining close to the shaft infrastructure.

What would you say is the biggest lesson Pan African has learnt throughout the years?

Significant opportunities exist when resources are brought to account in a considered manner, especially in areas that were host to some of the world’s major ore deposits and prime areas thought to be mined out – such as the Witwatersrand Basin and the Barberton Greenstone Belt.

Operating in South Africa requires compliance with the law and adherence to strict health and safety standards. Also, applying new techniques, innovative thinking and world-class project execution can produce excellent results.

How has the Department of Mineral Resources and Energy (DMRE) dealt with Covid-19?

The DMRE has been proactive in engaging with the SA Minerals Council – the industry body that represents the majority of South African mining companies, including Pan African.

Together, we have formulated standard operating procedures (SOPs) required to prevent the spread of the Covid-19 at mining operations.

What measures has Pan African put in place to curb the spread of Covid-19 at its operations?

Prior to the announcement of the lockdown regulations, we developed SOPs at all our operations, implementing best practices as provided by the SA Minerals Council and the DMRE, and in line with National Institute for Communicable Diseases guidelines.

The actual implementation of the practices includes necessary information campaigns at all operations (posters, video screens, daily safety talks), social distancing, the provision of sanitisers and disinfectants, regular temperature monitoring at entrances to operations, social distancing and isolation, regular disinfecting of workplaces and transport, as well as having the required medical personnel and facilities in place. These practices continue to be enhanced as new information in fighting the pandemic becomes available.

Operating in South Africa requires compliance with the law and adherence to strict health and safety standards

How do you see the future for Pan African Resources over the next few years?

We will first focus on the pipeline of organic growth opportunities available within our existing mining licence areas and bring these to account.

We are finalising an independent review of the feasibility study at our Egoli Project at Evander and are considering the available funding options to fast-track its development. Egoli FOLLOW THE LINK is an underground mine where the bulk of the infrastructure is already in place (such Read the full story: as the shaft and plant) and will have the miningnews.co.za/ capacity to produce about 90 000 oz per 2020/07/28/executivesyear over a period of 10 years. At Barberton, discuss-mining-in-africa the Royal Sheba project has gold resources of approximately 650 000 oz that can also be extracted from existing infrastructure.

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CEO TALK

Resolute’s resilience in Africa Resolute Mining owns three gold mines in Africa – Syama (Mali), Mako (Senegal) and Bibiani (Ghana) – with a global mineral resource base of more than 13 million ounces. In addition, Resolute is involved in mine exploration and development projects.

Inside Mining interviews John Welborn, managing director and CEO of Resolute Mining.

What makes mining in Africa different compared to the rest of the world?

John Welborn The first thing that makes Africa unique is its massive endowment of geological potential, whether it is gold or iron ore, bauxite or tantalum, or any other FOLLOW THE LINK commodity. A lot of Africa is largely unexplored by modern miners, which is Read the full story: exciting. Africa represents a relatively new miningnews.co.za/2020/07/28/ frontier for mining. resolute’s-resilience-in-africa

What is the most challenging aspect about operating in Africa?

John Welborn is the managing director and CEO at Resolute Mining

Resolute has been mining in Africa for over 20 years. The challenging aspect for miners in Africa is understanding the cultures and environment in which you operate. With African stakeholders, government and local communities being the obvious ones, recognising differences in mining practices between jurisdictions is important.

How has Resolute dealt with such challenges?

Resolute first entered Ghana in the late 1990s. The company has therefore had 20 years to take its training wheels off. Resolute continues to develop its ability to operate in Africa through experience and relationships. The fundamental relationships are with the host governments, the local communities and, importantly, our workforce. Increasingly, I see an area of opportunity – and an advantage for Resolute – being the ability to train and employ a largely African workforce on African gold mines.

What impact do you think the African Continental Free Trade Agreement would have on mining companies operating in Africa?

It will have a positive effect, particularly on the bulk miners. There is an opportunity to make the free trade agreement advantageous for African countries and the African people, as well as international mining companies.

What would you say is the biggest lesson Resolute has learnt throughout the years operating in Africa?

Resolute is still learning lessons. I think the biggest lessons learned are patience and perseverance. I am a huge believer in the potential of Africa, but it does require commitment. Mining is a long-term commitment. The idea that you are going be able to come into new jurisdictions and exploit resources quickly for immediate benefit is, first, naive and, second, does not reward all the stakeholders. An important aspect of the successful development of African mining is to have a long-term view and be patient.

Where do you see Resolute’s African operations in the future?

Our strategy is to be a multi-mine low-cost African gold producer. We currently have two operating mines, being Syama and Mako. Resolute’s ambition over the next few years is to continue to improve these operations and use that success to develop new gold mines.

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THE FOCUS IN AFRICA ISSUE | 2020

CEO TALK

A harmonious approach Harmony Gold is a gold-focused mining and exploration company and conducts its activities in South Africa and Papua New Guinea. Inside Mining interviews CEO Peter Steenkamp.

What makes mining in Africa different compared to the rest of the world?

Peter Steenkamp I believe that, as a South African mining company, we fully understand the importance of sustainable development and empowering the communities in which we operate

What would you say is the most challenging thing about operating in South Africa?

We understand the importance of creating a sustainable business that benefits all its stakeholders, and believe that more stable and certain regulations that are enforced for longer periods will achieve just that.

How best do you manage such challenges?

Understanding the needs, expectations and aspirations of all our stakeholders enables us to shape our actions in determining strategy, addressing problems, and allocating resources.

It underpins the value creation process. Effective stakeholder engagement helps us to better manage risks, opportunities and challenges. It all boils down to collaborative efforts between the various stakeholders.

How has the Department of Mineral Resources and Energy dealt with Covid-19 and what impact did this have on operations?

The leadership displayed by government and particularly the minister is commendable. The president’s initial announcement of the lockdown on 26 March – I believe – was a good pre-emptive move to flatten the curve. It not only allowed government time to prepare for when the number of cases increases, but also allowed us as an industry to ready ourselves and our teams to deal with this pandemic when we start having cases at our operations, as we have just recently seen.

What measures has Harmony put in place to curb the spread of Covid-19 at its operations?

Harmony rolled out a risk-assessment-based Covid-19

prevention strategy across all its operations before the lockdown was announced in March 2020 (see our SENS announcement released on 18 March 2020). The objective of the risk assessment is to identify, evaluate and rank the hazards associated with any exposures to Covid-19 and potential infections. It enables the company to reduce or eliminate the probability of an employee contracting Covid-19 and to limit the severity should an employee be infected.

Where do you see Harmony in the next few years with its African operations?

Harmony aims to grow its ounces to 1.8 Moz by financial year 2021, repay debt, and continue to increase its cash margins generated from its existing operations, organic opportunities and acquisition opportunities in Africa and Papua New Guinea.

We are currently in the process of concluding our acquisition of Mponeng and MWS from AngloGold Ashanti. Once completed, these assets will not only significantly improve our SA reserves (above and below infrastructure), but also support an increased grade profile and boost our cash flow. Our new business development team continues to look for opportunities throughout the continent and in Papua New Guinea – a jurisdiction where we have an existing footprint.

Peter Steenkamp believes that Africa is gifted with a variety of resources

FOLLOW THE LINK Read the full story: miningnews.co.za/2020/07/28/ a-harmonious-approach

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CEO TALK

Expanding Africa’s platinum assets

Implats is a of platinum group metals (PGMs) producer with six mining operations in South Africa, Zimbabwe and Canada. Johan Theron, group executive: Corporate Affairs at Implats, answers Inside Mining’s What makes mining in Africa questions. different compared to the rest of the world?

Johan Theron Implats has operations in South Africa, Zimbabwe and Canada – with each country offering challenges and opportunities. Looking at the African context specifically, the continent produces more than 60 metal and mineral products, and has huge potential in terms of mineral reserves exploration and production.

FOLLOW THE LINK

What is the most challenging aspect of operating in Africa?

Operating in Africa has its unique challenges. In South Africa, factors such as rand volatility and the operational and financial crisis at Eskom pose challenges to all domestic producers. In Zimbabwe, the economic crisis, effects of the drought, rolling power cuts, and shortages of food and other essential supplies pose challenges to businesses and citizens alike.

Read the full story: miningnews.co.za/2020/07/28/ expanding-africa’splatinum-assets

How does Implats deal with these challenges?

Johan Theron is the group executive: Corporate Affairs at Implats

At Implats, stakeholder engagement remains key to the successful implementation of the Implats strategy in the countries in which we operate. The goal of contributing to socioeconomic transformation remains a strategic imperative. The Group actively seeks to play a role in meeting governmental social and economic development goals in South Africa and Zimbabwe.

What impact do you think the African Continental Free Trade Agreement (AfCFTA) would have on mine companies operating in Africa?

Economic and political stability

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are critical elements for the success of the AfCFTA, not just nationally but also regionally. The political will driving the initiative provides a unique platform for resolving disputes and long-standing issues between African nations, as they move towards deeper regional integration and embrace the concept of shared value.

What measures has Implats put in place to curb the workplace spread of Covid-19?

All employees are screened using questionnaires, thermo-scanning of skin temperature and, if necessary, core temperature screening, before entering their work areas. Employees with abnormal temperatures will be isolated at dedicated areas at the operations and then be transported to designated medical facilities for diagnosis and, if necessary, testing, quarantine and/or hospitalisation.

A key part of Implats’ Covid-19 strategy has been to identify potentially vulnerable employees and to institute additional specific precautionary measures to increase protection. This includes the provision of vitamin and dietary supplements, flu vaccinations, and critical medical screening. In addition, employees have been provided with pre-packaged supplies of chronic medication for a period of six months to ensure high-risk employees do not need to visit hospitals or clinics during this time. Suitable temporary company accommodation is also being availed to employees who may not be able to self-isolate or practise recommended social distancing measures when not at work.

How does Implats view the next few years for its African operations?

Implats’ key projects and business development activities are focused on low-cost, predominantly mechanised assets that can deliver defensive cash generation to entrench the Group’s competitive position and sustain profitability well into the future.

Our organic growth at our African operations focuses on the 12 Shaft and 16 Shaft projects at the Impala Rustenburg operation, and the Mupani Mine project at Zimplats.

THE FOCUS IN AFRICA ISSUE | 2020

CEO TALK

A rare peak for REEs ASX-listed Peak Resources discovered rare ear th mineralisation at Ngualla, Tanzania, in 2010. Together with its par tners, Peak is developing the site into a low-cost next-generation rare ear th elements (REEs) project that is strongly aligned to the expanding, high-value, hightech magnet metal market.

CEO Rocky Smith talks to Inside Mining.

What makes mining in Africa different compared to other continents?

Rocky Smith Africa is a beautiful continent with a rich bounty of natural resources. Therefore, mining in Africa will not only allow companies to extract high- grade minerals but – with the development of infrastructure and services – can help the local surroundings and employment levels to improve.

What would you say is the most challenging thing about operating in Africa?

there are numerous levels of bureaucracy that need to be navigated when operating in the country. We have had unanimous support for our project throughout all levels of government, yet it takes time for permits to be granted.

How has Tanzania’s Ministry of Minerals dealt with Covid-19 and what impact has this had on operations?

The Ministry of Minerals in Tanzania has for the most part operated as normal. We have continued to hold meetings with the ministry, although most are now held online or over the phone. The main impact of Covid-19 on our company is that our executive management has not been able to fly to attend important face-to-face meetings that have been requested by the ministry.

The free movement of labour would also assist us to access skilled and semi-skilled staff that can be difficult to find, particularly when commencing new operations.”

What does the near future hold for Peak Resources?

Peak aims to enter the production phase in the next few years, after securing the special mining licence in Tanzania. Thereafter, funding is to be secured and the building of two plants is to commence – these being a beneficiation plant in Tanzania and an REEs refinery in the UK.

Rocky Smith, CEO of Peak Resources

The primary industry near this particular mine, Ngualla, is agriculture based, so the skills needed for the mining operation will have to be developed. The infrastructure/logistics in the project location will have to be created to support the construction and operation of the mine, given the distance from the port.

How is Peak Resources planning to overcome these challenges?

Operation readiness plans need to be developed to formulate hiring and training programmes to extend employment opportunities to as many locals as possible. The long-term plan is to find and develop the technical skills needed in Tanzania to optimise the operation of this facility.

What would you say is the biggest lesson Peak Resources has learnt operating in Africa?

Patience. Speaking only from experience in Tanzania,

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INVESTMENT & FINANCE

Funding advice for the Mametja Moshe is the founder and CEO of Moshe Capital (Credit: Mboma)

UNDERESTIMATED AFRICAN MINING SECTOR

Mametja Moshe believes that the African mining sector is often underestimated and is optimistic about the prospects for mining on the continent.

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ot only does Africa have a rich endowment of commodities, but our young population and opportunities for using Fourth Industrial Revolution technologies position us well for mining investment.

Covid-19 has changed the world as we know it and the same goes for the African mining sector. One possible positive outcome for African mining following the global economic shock could be increased investment into certain commodities.

In 2020, the commodities in demand are gold, PGMs, copper and battery minerals. In addition, African exploration is securing funding where investors have confidence in management and the project has scale potential.

The gold price today is around US$500 (R8 245) higher than 18 months ago. This more than triples miners’ profit margins, which have also benefited from the decline in fuel costs. In times of economic uncertainty, investors typically turn to safe-haven assets, which could result in a renewed gold rush for a continent rich in this commodity.

In addition, Europe and other geographies are seeking to diversify the source of their commodities outside of China, which could also result in increased activity for Africa, especially in battery minerals.

The outlined factors all indicate that Africa’s mining industry will seek further investment with a view to attaining economic recovery.

Funding mechanisms The standard ‘toolbox’ of funding mechanisms is always

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THE FOCUS IN AFRICA ISSUE | 2020

INVESTMENT & FINANCE a good starting point, with the caveat that companies will need to be more innovative about how funding can be raised.

Public bourses have experienced a bloodbath and are still difficult places to source any funding. Does this mean that mines cannot raise funding in this environment? We do not believe so, and Sasol’s recent announcement of a $2 billion (R33 billion) rights offer supports this. That said, raising public equity funding will be more difficult in the coming year, as investors go after ‘safer’ assets, including resilient investments and jurisdictions. Rights offers may be attractive as they would not adversely dilute existing shareholders.

Development finance institutions are going to be critical in this period. Although there are various Covid-19 relief programmes in Africa worth over $20 billion (R330 billion), none of these are specifically directed at mining. Developmental finance institutions may take views to invest in mining operations given that their investment criteria lean towards the retention and creation of jobs, economic and social development, and sustainability goals.

Mines that want to access this funding will need to ensure that these criteria are met and weigh this against potential profitability and sustainability goals for their businesses.

Streaming transactions: In recent times, traders have been funding mining companies on the back of their production. This method is becoming popular as it is seen as a win-win solution in the current crisis – miners need capital, and traders are then able to enjoy the upside in commodity prices.

Internal resources: As we know, cash is king. Several companies across the globe have announced that they can withstand the impact of the Covid-19 using internal resources and existing lines of credit.

Can we find more innovation for funding African mining projects?

Having advised on some of the most complex mining deals in Africa, including advising Lonmin on SibanyeStillwater’s R4.1 billion acquisition of Lonmin’s issued share capital, Moshe Capital’s approach is to focus on the fundamentals for inclusive prosperity in an innovative way.

Mines should seek out pockets of cash earmarked for mining businesses. For example, we are a shareholder in Mining Minerals & Metals plc, a specialpurpose acquisition company listed on the London Stock Exchange, which seeks to acquire businesses in natural resources exploration. Existing cash shells

could provide an attractive cushion, particularly for exploration companies and junior miners.

Internal sources of funding may include the disposal of non-core assets, but it is imperative to attract interest from the right acquirers if this is an appropriate course of action. In the past, we have identified and highlighted attractive cost or revenue synergies for potential investors, which has led to the successful disposal of non-core assets. These include combining contiguous mines, which could increase life of mine; the disposal of assets to benefit neighbouring mines from existing infrastructure; and disposals of plant and equipment, especially inter-Africa.

Some lessons learned when investing in African mining One of the most common challenges mining companies experience on the African continent is around stakeholder management. The common theme is a lack of government, community and local partner involvement in projects at nascent stages. The value of on-the-ground local knowledge, constant understanding of changes and established networks in African projects is key to navigating the local nuances of each country and agility Covid-19 has to engage stakeholders expeditiously. ESG (environmental, social and governance) changed the world analysis is an investment in realising as we know it and the shareholder value and the absence of good same goes for the African ESG can be a costly value erosion.

Investors should not underestimate mining sector. One the importance of proper ESG based on possible positive outcome the perceived unsophistication of some for African mining African countries. Investors and funders are held to international standards here too – following the global something which should be a given, even if economic shock could be there are some countries with more relaxed increased investment into compliance requirements.

A second challenge relates to changes certain commodities.” in regulation during the investment period. Continuous engagement with the government is required to ensure alignment and minimise risks to the project on account of regulatory changes. In South Africa, ongoing active engagement between Minerals Council members and the Department of Mineral Resources and Energy assisted in unlocking regulation after a period of hiatus.

Clearly there is no catch-all solution in a tough market; however, miners will need us to all come together as advisors, funders, investors, government and other stakeholders to find innovative, unique investment solutions that contribute to inclusive prosperity.

Perhaps this is what the Covid-19 pandemic is teaching us – to work together to find inclusive solutions as a united industry.

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THE FOCUS IN AFRICA ISSUE | 2020

LEGAL & BUSINESS

How to seize opportunities in

African mining sector for mutual benefit Africa as a mining destination still has a lot to offer and – provided all players acknowledge the need for ‘equitable sharing’, along with policy and regulator y stability – there are likely to be sufficient oppor tunities for ever yone to benefit, writes Wandisile Mandlana*.

Wandisile Mandlana has worked as an academic, in-house legal counsel and a practising attorney in various aspects of public law

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he mineral potential of African countries is African Union to give effect to the AMV is not open to doubt, and the mining sector the intended move towards improving has since time immemorial been one of the legal and regulatory framework the major contributors to the continent’s and increasing public awareness of and economy. As new minerals continue to be discovered, participation in mining. subject to the finite nature of minerals, the mining In response to the AMV, many African sector will for the foreseeable future continue to be a countries have recently embarked on key component of diversified, vibrant and competitive legislative and policy reform in one national, continental and international capital and form or the other. commodity markets.

This reform is Questions and criticisms are raised from time to time, intended to increase however, as to whether the benefits of Africa’s mineral or diversify mining wealth are equitably shared. In an attempt to address companies’ these concerns, most African countries have passed law ownership, and policy instruments aimed at encouraging equitable mainly through distribution of their nations’ mineral wealth. These indigenisation instruments have unfortunately been criticised over the or local content years as ‘protectionist’ and stifling economic growth. requirements, It is for this reason that the African Union in 2009 increase public adopted the Africa Mining Vision (AMV), which is participation intended to be Africa’s blueprint mining sector vision. in decisionAmong other things, AMV calls for “transparent, equitable and optimal African governments, exploitation of mineral industry and communities will resources to underpin broad-based sustainable have to work together more to growth and socioachieve the shared vision for economic development”. the African mining sector One of the practical actions adopted by the

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making and ensure environmental regulation and community development.

Managing these issues could make or break a project.

In this article, we consider the minimum content of these issues and where appropriate, make some suggestions on how best to deal with the issues, taking into account some of the country nuances.

Policy and regulatory stability African countries are at different stages of their legislative and policy reforms, some of which have unfortunately resulted in regulatory uncertainties in some instances.

These policy and regulatory uncertainties include but are not limited to transitional provision of past and present instruments, fiscal regimes, regulatory consents, environmental protection and regulation, and empowerment requirements. The uncertainties may manifest themselves in critical aspects of any mining project regardless of the project phase, including a new project, expansion, exits, closure or when entering a new jurisdiction.

If the African mining sector is to continue to be a key component of a diversified, vibrant and globally competitive industrialising African economy, as

FOLLOW THE LINK Read the full story: miningnews.co.za/2020/07/28/ how-to-seize-opportunitiesin-african-mining-sector-formutual-benefit

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required by the AMV, it will be important to improve the continent’s policy outlook because this is a key investment consideration.

The importance of a certain and stable policy and regulatory environment is evident from the emphasis placed on it in well-established and widely accepted sources such as the Fraser Institute’s mining survey (Fraser Survey). In determining a country’s investment attractiveness, the Fraser Survey takes into account the country’s mineral potential and policy perception, among others.

While geological attractiveness is a key investment consideration, several studies have shown that investors seriously take into account the policy and regulatory environment in choosing their mining investment destinations. A country with a stable and certain regulatory environment tends to attract more investment. For Africa to achieve the objectives of the AMV of shared prosperity, more effort should be put into ensuring stability and some uniformity in the continent’s regulatory regimes.

Indigenisation/local content Much is written about African countries’ indigenisation requirements. Criticisms and drawbacks of these

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requirements are well documented and nothing much will be achieved by rehashing these here. It must be mentioned, though, that most countries’ indigenisation requirements have improved and/or stabilised – especially those relating to ownership and local procurement.

Given the importance of the objectives of indigenisation or local empowerment, a company invested in the African mining sector needs a sensible strategy to deal with these requirements. Failure to do so can have a deleterious effect on the sustainability of the operations and/or adversely impact the social licence to operate.

Some future developments in the indigenisation/ local content space to which mining companies should pay attention include the ‘on and off’ calls many African countries have been making for increased state participation in mining and restrictions on exports of ore that is not beneficiated to a predetermined state.

Environmental regulation Most African countries have detailed laws intended to address the impact of a mining operation on the environment and human health and safety. These measures include: (i) the requirements to address the

environmental and social impacts before undertaking the mining operation or to conduct the mining operations in accordance with good mining industry practices; and (ii) the obligation to rehabilitate the mining area. Anyone involved in a mining project in Africa will have to contend with increased focus on laws containing various environmental protection measures.

In addition to the existing laws, some of the key environmental protection measures to prepare for include planning for climate change regulation and/ or litigation. A few countries are working on climate change regulation laws and policies that will have to be taken into account in planning or implementing new and existing projects.

While there is no doubt about Africa’s minerals potential, there is also little doubt about how this potential can be extracted. African governments, industry and communities will have to work together more to achieve the shared vision for the African mining sector. Equitable sharing and policy and regulatory certainty should be high on the agenda of all parties. *Wandisile Mandlana is a partner at Bowmans specialising in environmental law, mining law, energy and climate change law.

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Understanding mining legislation LEX AFRICA

Mining is a complex and highly regulated business, especially when operating in a foreign country. In addition to knowledge about mineral reserves, it is important to clearly understand the applicable legal, regulatory and business framework of the host country.

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ex Africa’s Guide to Mining Regimes in Africa is an informative and useful introduction to the mining industry in 17 African countries.

Focusing on the legal framework for the mining and oil and gas industries, Inside Mining features Tanzania and Namibia, which both appear in the guide.

Tanzania

Alyshah Bharwani is an associate at FB Attorneys in Tanzania

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Tanzania is home to various minerals such as gold, iron ore, nickel, copper and cobalt. The East African country is gifted with abundant gold reserves. As such, most of the mines in Tanzania are gold producers.

The Ministry of Minerals is responsible for administering the mining industry. The portfolio minister monitors all establishments and prepares policies, strategies and legislative framework for the exploration and exploitation of mineral resources as well as monitoring the implementation of government policies on minerals. The chief officer relating to mining regulation is the chairman of the Mining Commission, who is assisted by eight commissioners (all presidential appointees).

The Mining Commission, which operates through Mining Cadastres and Committees, among other functions, regulates and monitors the mining industry and mining operations, and advises the government on all matters relating to the administration of the mineral sector. It considers relevant applications, processes, grants, revokes or suspends mining licences and permits.

Rights for conducting reconnaissance, exploration and mining operations The Mining Act does not contain a provision for a right to conduct reconnaissance. A prospecting licence is required to conduct exploration. However, exploration activities may also be undertaken under the various mining licences in addition to mining operations.

The law introduces several types of licence, which include a Special Mining Licence (SML), Mining Licence (ML), Gemstone Mining Licence (GML), and Primary Mining Licence (PML). SMLs are issued in respect of large-scale mining operations whose capital is not less than US$100 000 000 (R1.65 billion) while MLs relate to medium-scale mining operations whose capital investment is between $100 000 and $100 000 000 (R1.65 million to R1.65 billion). GMLs are reserved for Tanzanian citizens – except in the case of joint ventures where 50% of the joint venture interest is controlled by a Tanzanian – and PMLs are also restricted to Tanzanian citizens only.

Oil and gas The principal legislation regulating the exploration and production of the oil and gas sector in Tanzania is the Petroleum Act, 2015. This act provides for regulations of upstream, midstream and downstream petroleum activities. The act is also supplemented by the Oil and Gas Revenues Management Act; Energy and Water Utilities Regulatory Authority Act; Tanzania Extractive Industries (Transparency and Accountability) Regulations; Public Corporations Act; Public Procurement Act; Public Procurement Regulations; Petroleum (Natural Gas Pricing) Regulations; Petroleum (Local Content) Regulations; and Public Private Partnership Regulations. The laws mentioned under the mining section above concerning environment protection, investment, tax, PPP, custom management, health and safety, natural wealth, renegotiation of terms, and land also apply to the oil and gas sector.

Compiled by Alyshah Bharwani

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Namibia According to the Namibia Chamber of Mines, Namibia is a world-class producer of various minerals such as gemquality rough diamonds, uranium oxide, special high-grade zinc, gold, copper and lead.

Various well-known mine companies are currently operating in Namibia using state-of-the-art mining and processing technologies.

Under article 100 of the Constitution of the Republic of Namibia, 1990, all natural resources vest in the state unless they are otherwise lawfully owned. Mining in Namibia is regulated by the Minerals (Prospecting and Mining) Act 33 of 1992.

Section 2 of this act vests all rights in respect of minerals in the state. This act also provides for the administration of the minerals industry and access to mineral resources through various types of authorisations.

There are other laws that could also be applicable to Namibia’s mining industry.

They include: • Diamond Act 13 of 1999 •M inerals Development Fund of Namibia Act 19 of 1996 • Namibia Investment Promotion Act 9 of 2016 • Soil Conservation Act 76 of 1969 of 1981 • Forest Act 12 of 2001 •A tomic Energy and Radiation Protection Act 5 of 2005.

The minerals industry falls under the auspices of the Ministry of Mines and Energy and its line minister, the Minister of Mines and Energy. The minister is assisted by the Mining Commissioner. The Minerals Act also provides for a Minerals Board of Namibia and prescribes the function of the Mining Commissioner and the Minerals Board.

Environmental issues are regulated by the Minister of Environment and Tourism. This minister is assisted by the Environmental Commissioner, whose functions are prescribed by the EMA.

Mining rights With regard to the mining rights, FOLLOW THE LINK a person may apply for several Read the full story: authorisations to search for minerals. miningnews.co.za/2020/07/29/ These are a non-exclusive prospecting understanding-mininglicence, exclusive prospecting licence, or legislation:-tanzania reconnaissance licence.

A reconnaissance licence permits the holder to conduct reconnaissance operations, which are operations carried out in a general search for any mineral or group of minerals by means of aerial sensing techniques, including geophysical surveys, photogeological mapping or imagery carried out from the air. It is valid for a maximum period of six months and may not be renewed. It may, however, be extended once for a period of six months. The Minerals Act provides for exclusive reconnaissance licences, but these are no longer issued in practice.

Oil and gas The upstream petroleum industry in Namibia is primarily regulated by the Petroleum (Exploration and Production) Act 1991 (Act 2 of 1991). The Petroleum Act provides for the reconnaissance, exploration, production and disposal of petroleum, as well as the control over petroleum. It provides that all rights in respect of petroleum vest in the state, notwithstanding any right regarding the ownership of the land where the petroleum is found.

No person may carry on any operations in respect of petroleum without the necessary licence issued by the Ministry of Mines and Energy.

Compiled by Dr Meyer van den Berg

Dr Meyer van den Berg is a partner at Koep & Partners in Windhoek, Namibia

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COVID-19

Hands-free sanitiser stand RGM Cranes has engineered and developed a hand sanitiser dispenser that takes the fuss out of uncompromising hand cleanliness.

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The free-standing hand sanitiser is foot operated

s businesses start returning to limited operation, the challenge of ensuring that employees adhere to the stringent health and safety regulations, required for WHO (World Health Organization) compliance, may take its toll on management.

“During the initial lockdown period, we set our team of engineers and various other contributors the task of developing a hand sanitising solution that would be cost-effective, simple to use and which ensured that the user or operator of the unit would not need to touch the pump lever with their hands,” says Alex Dowling, CEO of RGM Cranes.

The resultant free-standing sanitising station is operated using a durable foot pump and accurately dispenses 4 mℓ of sanitiser, which is above the WHOrecommended dose of 3 mℓ. The unit is designed to provide accurately dispensed doses and can be floormounted, using rawl bolts, to ensure that it remains static during operation. Ideal for use in high-traffic areas, the dispenser conforms to the appropriate social distancing recommendations.

The sanitiser dispenser is not limited to hand sanitiser only as it may also be utilised for handwashing stations.

It is also easy to clean and has a sanitiser level indicator to ensure the bottle does not run dry.

MINING: KEY TO REBUILDING SOUTH AFRICA’S POST- COVID-19 ECONOMY Mining has always been central to the South African economy. Today it is key to rebuilding the country in a post-COVID-19 era.

Aside from its significant contribution to GDP, the fixed direct investment and export earnings it continues to generate, the industry remains a significant employer of more than 450,000 people. For every direct mining job, there are at least two other jobs created in allied industries, and each mining employee supports between five and 10 dependants. This sector is a significant source of primary income for the economy and based on a GDP multiplier of some 2.27 times, it stimulates significant economic activity in the rest of the economy.

The scale and impact of the pandemic has been unprecedented from a humanitarian and economic perspective.

The future demands a more modern, more collaborative culture – one we all embrace – where we save both lives and livelihoods, as we rebuild South Africa’s economy. We are ready.

#MakingMiningMatter www.mineralscouncil.org.za

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DOING BUSINESS IN A post-Covid-19 Africa Even before the global Covid-19 pandemic, and the implementation of stringent lockdowns and other measures, in response, Africa’s mining and natural resources sector faced significant challenges. By Warren Beech*

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ome of the challenges include policy and regulatory uncertainty, uncertain commodity cycles and prices, ageing and unreliable infrastructure (roads, rail, electricity and water), loss of investor confidence, ageing mines and mining complexes that are extremely expensive to keep running, stakeholder demands – particularly from communities around mines – illegal mining, and concerns surrounding security and corruption.

Each year, Africa markets itself to the investment community as being ‘open for business’; however, the various challenges have continued to plague the mining and natural resources sector, but there have been some positive, success stories, along the way – particularly in those countries that support their mining and natural resources sector through the implementation of a financial, regulatory and business environment that makes it easy to do business. Examples include various countries in West Africa, Botswana and Namibia.

The global Covid-19 pandemic has changed the landscape, substantially, and, possibly, forever. Several of the positive lessons learnt, particularly those relating to hygiene practices, may be in place for a long time, but the negative consequences of the Covid-19 pandemic are likely to include significant increases in unemployment, which will exacerbate an already desperate socio-economic landscape and may mean that the drive to reopen economies and provide employment will overshadow other lessons learnt from Covid-19.

The pandemic has, however, also opened up opportunities for stakeholders in the mining and natural resources sector to do things differently, more efficiently, and more cost-effectively (one of the key concerns regarding the sustainability of mining operations across Africa). The pandemic has created the natural opportunity to reconsider, and possibly accelerate, the transition to mechanisation, automation, and the implementation of structures and business models that rely on the internet of things and artificial intelligence.

Nationalism and nationalisation In the post-Covid-19 landscape, those countries that make it the easiest to invest and do business are likely to not

only survive, but indeed thrive. The mining and natural resources sector cannot be viewed in isolation, because it is generally the ‘engine room’ of the economy, and it is a good barometer of the health of the economy in each country.

The sector also typically plays a critical role in transformation and development, and if it is not performing properly, this has a knock-on effect on most, if not all, other sectors. The mining and natural resources sector is multifaceted, and requires a strong network of associated industries and sectors to ensure that it can operate efficiently.

Where the mining and natural resources sector is underperforming, it often results in significant adverse consequences (including the failure to deliver on socioeconomic expectations), which often manifest themselves in community unrest and disruption, and provide a basis for stakeholders to argue in favour of resource nationalism.

In some instances, underperformance is used to support the call for nationalisation of the mining and natural resources sector. Africa was facing strident calls for nationalisation of its mining and natural resources sector, even before the Covid-19 pandemic, and it is likely, because of the significant and deep socio-economic impact of the pandemic, that many governments will be challenged to move across the spectrum of nationalism, to nationalisation.

Many African countries that have vast mineral resources have implemented resource nationalism measures, incrementally, to ensure that investors are not scared off, but will in any event be locked in by their investment, which allows further measures to be implemented, in support of resource nationalism, over time.

Warren Beech has over 20 years’ experience as a lawyer in the mining industry

Mining legal framework One of the most significant challenges, prior to the Covid-19 pandemic was business integrity, corruption and irregular processes. It is likely that these challenges will remain after the pandemic and it is possible that the measures that have been

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The Covid-19 pandemic could potentially fast-track mechanisation efforts in mines

implemented to address Covid-19 may have the unintended consequence of actually facilitating corruption and impacting on business integrity. Actual or perceived corruption has played a significant role in investor decisions, and more and more companies are focusing on compliance, anti-bribery and other anticorruption measures.

Whether this has been driven by listings requirements, legislation, reputational risk or moral grounds, compliance and monitoring programmes have increased in complexity with a strong emphasis on acknowledging the current borderless world, the slippery slope of the first ‘facilitation payment’ made to expedite and facilitate licencing processes, and socio-economic realities.

The mining and natural resources sector in African countries (as it does in the rest of the world) operates within a highly regulated legal framework, which means that FOLLOW THE LINK the sector is subject to constant interpretation and application of Read the full story: miningnews.co.za/2020/07/28/ existing mining and environmental doing-business-in-a-postlaws, changes to mining and covid-19-africa environmental laws, and the promulgation of new mining and environmental laws, at regular intervals. In addition, other laws that may apply to the mining and natural resources sector also undergo regular changes and replacement, at regular intervals.

This all means that the sector has to dedicate appropriate resources to ensure that the relevant mining operations keep up date with changes and implement appropriate programmes to ensure compliance. The allocation and dedication of resources to do so cannot be underestimated. There are potentially significant consequences that may flow from non-compliance, including the issuing of compliance notices and directives, the imposition of administrative or criminal fines, and, in the worst-case scenarios, the suspension or revocation of prospecting and mining rights.

Competing for investors Another reality is that each country is in competition for investment. A common saying among investors is that capital, like water, finds its way around obstacles. However, it is also said that capital is extremely scared – it runs at the first sign of trouble.

Countries that are able to cut through the ‘red tape’ and provide an investment-friendly environment, including policy and

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regulatory certainty and stability, are likely to attract better quality investment. Countries also able to demonstrate strong support for the rule of law and outspokenness on corruption are likely to find themselves as even better investment destinations.

Importantly, however, it is vital for investors to understand the critical importance of the ‘social licence to mine’, and that the consequences of not obtaining this social licence can be catastrophic: after significant investment, relevant mining and environmental licences may not be issued, and, even if they are – and operations do start up – the operations can be disrupted, suspended, and the relevant rights to prospect and mine can be taken away in the worst cases.

The second example is West Africa. West African countries like Ghana have been in the spotlight for many reasons, including being the beneficiary of extensive exploration and development of operating gold mines for approximately 20 years.

This has been due to a combination of factors, such as the relative accessibility of the gold reserves, better infrastructure in comparison to other countries, better access to a semiskilled and skilled workforce, and a relatively stable policy and regulatory regime. The relative accessibility of the gold reserves and the low-cost extraction have also meant that neighbours, such as Mali and now Burkina Faso, have been benefiting from substantial investment.

West African countries recognised the importance of regional solidarity as far back as 1975, when the Economic Community of West African States (Ecowas) was established by treaty. The vision of Ecowas has been simple – to create regional opportunities for growth and development by removing barriers and making it easy to do business in West Africa, so that citizens of the member states can benefit.

West Africa has been viewed by investors as an attractive destination, and this is likely to continue, even in the post-Covid-19 world. Its abundance of untapped mineral resources (including gold, iron ore, diamonds, bauxite, phosphate and uranium), the stability of Ecowas and common policy and legislation frameworks in the region contribute to investor confidence. So, West Africa may see good investment provided that it can address significant concerns regarding illegal mining operations, and regional security and stability.

The recent attacks on mining personnel in Burkina Faso has caused alarm, and there is a real concern that illegal, artisanal and large-scale mining could be a target for incursions from neighbouring countries because the gold reserves, which are relatively easily available, can fund the activities of the various organisations that have apparently been carrying out these attacks.

Africa will remain an important investment destination, particularly focused on the mining and natural resources sector. It is essential for investors to properly understand the challenges that they will face in each country and to be realistic about expectations.

Investors must also acknowledge the importance of the ‘social licence’ and full compliance with the mining and environmental laws that apply in each country. *Warren Beech is a partner and head of mining at law firm Eversheds Sutherland.

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THE LEGAL COMPLEXITIES OF MINES OPERATING IN AFRICA

The African continent, which holds 30% of the world’s mineral reserves, is renowned for its mineral wealth – a great deal of which remains untapped. By Jonathan Veeran, Analisa Ndebele & Shazelle Jeevaruthnam

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frica has a wide range of mineral resources that have a practical use in several industries, including manufacturing, energy and infrastructure development.

This makes the continent a desirable destination for investors, with plenty of opportunities that exist for current and future mining projects in Africa, especially with the onset of the Fourth Industrial Revolution. However, these opportunities are often accompanied by a unique set of barriers that make mining in Africa a complex undertaking.

Regulatory framework A clear and consistent regulatory framework is a key requirement for investors, who want a clear understanding of, among other elements, the ownership, tenure, royalties, tax and environmental laws that will govern a mining project. This allows for better capital allocation and more accurate forecasting of potential returns. Although African

mining codes have evolved over time, several African nations’ regulations governing mineral exploration and development are often unclear and unpredictable. Due to the interdependence of regulators and mine operators, this creates challenges as mines seek to fulfil requirements within their regulatory environments.

Continual changes in mineral regulations in most African countries exhaust the patience of investors, as this variability directly affects their bottom line.

In South Africa, this includes the introduction of indigenisation policies such as the new Mining Charter, while several other countries in subSaharan Africa have intensified the royalty and tax obligations placed on mining companies.

For instance, Tanzania now requires indigenous companies to have a 5% ownership stake in a mining project prior to a mining licence being granted and has banned the export of unprocessed minerals such as copper and gold.

Jonathan Veeran is an expert at Webber Wentzel on the regulatory aspects of, and transaction structuring in, the mining and oil and gas industries

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Zambia, on the other hand, continues its audit of financial statements dating back six years to detect possible tax evasion by mining companies. These developments reflect nationalist agendas that create an uncertain regulatory framework, making the decision to invest an arduous one.

The importance of infrastructure Infrastructure constitutes an essential component of the mining process. Many mining-related investments hinge upon the upgrade or establishment of entirely new roads, rail, port or electrical infrastructure.

Community members in mining areas also view infrastructure as a derived benefit for allowing mining activity to occur, and its lack often results in social unrest that threatens the social New capabilities, licence of mining companies. ever-decreasing In most African countries, governments costs and easy access to on their own cannot provide this technologies have created infrastructure, and this has led to increased royalties being charged as an opportunity for mines governments are pressured into providing to better manage data in infrastructure that benefits both the mining project and the communities. order to optimise both Many countries in Africa are unable to production and revenue produce the power required to carry out certain mining operations, which has spurred the creation of development finance institutions (DFIs). DFIs are specialised development

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banks or subsidiaries set up to promote private sector development in developing countries. The World Bank has been a key contributor.

Technology and mining operations The adoption of digital technologies carries broader implications for the communities in which mines operate, such as fears about job security and new opportunities to invest in affected communities, both of which inform the socio-economic considerations for the digital mine. In addition, there are myriad cyber risks involved in the transition to a technologically based sector, which entails developing a body of law to provide protection for all parties within the sector. Collaborative partnerships and an awareness of relevant risk management methods should be promoted in order to mitigate such risks.

Many mines have ignored the advancement of digital technologies; however, the new capabilities, ever-decreasing costs and easy access to technologies have created an opportunity for mines to better manage data in order to optimise both production and revenue. These digital advances will enable quicker and better decisions that reduce performance variability, as well as improve equipment utilisation and safety performance, by reducing the potential risk to workers involved in the mining processes.

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