ABN Vol 6 Iss 1 by Anderson Murray Media

AFRICAN

Volume 6, Issue 1

MINERALS COUNCIL SA

BUSINESS NETWORK

Industry and commerce from across the continent

South Africa’s reformed industry body

TERANGA GOLD

The model for sustainable development

EXCLUSIVE PREVIEW OF THE

TALKS TO INDABA’S MD AND DIRECTOR OF C ONTENT

WWW.AFRICANBUSINESSNETWORK.CO.ZA

INVESTING IN

AFRICAN MINING INDABA

4 – 7 February 2019 | Cape Town, South Africa

AFRICA’S LARGEST MINING INVESTMENT EVENT AND PREMIER DEAL-MAKING FORUM HEAR FROM THE ENTIRE VALUE CHAIN, 300+ SPEAKERS CONFIRMED, INCLUDING: H.E. Oumarou Idani Minister of Mines & Quarries Burkina Faso

Gareth Penny Chairman Norilsk Nickel

Charl Malan Senior Analyst & Portfolio Manager VanEck

Cheryl Carolus Chairperson Gold Fields

Nicole Bieske Head of Program - Mining for Sustainable Development Transparency International

Hon. Winston Chitando Minister of Mines & Mining Development Zimbabwe

Amaka Anku Practice Head, Africa Eurasia Group

Julian Treger CEO Anglo Pacific Group

Peter Hambro Chairman, Peter Hambro Ltd & Former Executive Chairman, Petropavlovsk

REGISTER NOW AT WWW.MININGINDABA.COM Want to increase your brand exposure? Get in touch with Fred Noce today: fred.noce@miningindaba.com

#25ye a r s of I n d a b a @miningindaba

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WELCOME

The Investing in African Mining Indaba returns to Cape Town for its 25th anniversary year in February, promising to be bigger, bolder and better than ever on this landmark occasion. The highly anticipated event will once again bring together the largest contingent of mining executives, investors and heads of state (including South Africa’s President Cyril Ramaphosa) to champion Africa’s sustainable economic development. This year, organisers have identified several topical themes across the African mining sector and incorporated these into a bumper four-day conference, which will give attending stakeholders a strong indication of just how the industry is shaping up in 2019. Our latest issue of ABN offers a concise preview of the 2019 Mining Indaba, after I spoke with its managing director Alex Grose and director of content Harry Chapman ahead of the event. In the interview, we discuss the return of the generalist investor, hot topics across the industry over the last 12 months and the role of the Indaba in driving capital into the African continent.

Executive Team Editor Jacob Ambrose Willson Content Manager Michelle Madureira Content Director (APAC and Americas) David Hunter Creative Director Hugo Currie ICT Director Stuart Clark Managing Director Simon Curran

The issue also features an exclusive interview with Roger Baxter, CEO of the recently rebranded Minerals Council South Africa, and Michael Cronwright from MSA Group writes an enlightening piece on Africa’s prospects in the critical materials mining space. Complementing this content is a selection of profiles on African miners, including Teranga Gold, GoviEx Uranium and Tietto Minerals, along with the company behind Africa’s largest wind farm. From everyone here at ABN, we look forward to meeting our readers at this year’s special 25th anniversary event. We hope you enjoy this issue and encourage you to connect with us on email, Facebook and Twitter.

Jacob Ambrose Willson Jacob Ambrose Willson Editor, ABN jacob@africanbusinessnetwork.co.za

ABN is published by Anderson Murray Media: a diverse media and information services company focused on creating and distributing engaging content to business leaders across the globe. SOUTH AFRICA Convention Tower, 1st Floor Cnr of Heerengracht & Walter Sisulu Street, Cape Town, 8001 +27 (0) 21 403 6339 LONDON Fulham Green, 69-79 Fulham High Street, Main Reception, Bedford House, London SW6 3JW +44 (0) 207 148 5631

WWW.AFRICANBUSINESSNETWORK.CO.ZA

CONTENTS NEWS 10 African business news Our selection of business stories from across the continent during the last month

AFRICAN MINING FOCUS 18 Mining Indaba 2019 preview ABN talks to Mining Indaba’s MD and director of content ahead of its 25th anniversary event 32 Mineral Council South Africa An exclusive interview with Roger Baxter – CEO of South Africa’s rebranded Minerals Council 44 MSA Group Michael Cronwright considers Africa’s bright prospects in the critical materials mining space

SPOTLIGHT COMPANIES 54 Teranga Gold The model for sustainable development in West Africa’s gold industry 68 GoviEx Uranium A growing Africa-focused uranium company 82 Tietto Minerals Fast tracking the development of gold assets in West Africa 94 Lake Turkana Wind Power Africa’s largest wind farm connects to Kenya’s grid

APPOINTMENTS & EVENTS 112 Appointments Notable appointments across the African business sector from the past month 113 Events Our pick of the top business events happening on the continent in the months to come

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NEWS | Brookfield Multiplex MINING

AFRICAN BUS

Our selection of the bigg the major sectors o

African Business Network 11

SINESS NEWS

gest stories from across of African business

NEWS

EAST AFRICA THE STRONGEST PERFORMING REGION FOR FDI IN AFRICA: EY REPORT East Africa has emerged as the strongest performing region on the continent for foreign direct investment (FDI), after recording an 82% increase in FDI projects in 2017. EY Global’s 2018 Africa Attractiveness report found that the region accounted for 30% of the continent’s total new FDI projects with 197. In total, foreign investors committed to 718 FDI projects in Africa last year, representing a 6% rise on 2016. The report said Africa’s success was a function of numerous factors including multispeed growth, investment friendly economic policies and regional integration initiatives, particularly in the East.

The formation of the East African Community, comprised of Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda, has provided a strong basis for economic growth in the region. East Africa’s leading economy Kenya reported a 68% increase in inward investment projects last year, despite political uncertainty in the second half of the year following a prolonged election cycle. “Kenya’s fast-growing technology sector, nicknamed ‘Silicon Savannah,’ continued to draw foreign investor interest,” read the report.

African Business Network 13

UNEARTHED SOLUTIONS OFFERS AFRICAN TECH FIRMS CHANCE TO PRESENT AT 2019 MINING INDABA Four emerging African technology businesses will be given the opportunity to pitch their innovative industry solutions at the 2019 Investing in African Mining Indaba through Australian incubator firm Unearthed Solutions. Unearthed has partnered with the Mining Indaba to create Startups Unearthed Africa, an online competition aimed at raising the profile of African hardware or software companies across the global mining sector. The competition is open to any business across the continent with a prototype, product or service that could impact the industry, and companies are not required to have prior experience working on a mining project.

The four successful applicants will showcase their concepts to approximately 750 investors and dealmakers, leaders from over 220 mining companies, and 34 government ministers at the world’s largest mining investment conference. Each winner will also receive a full complimentary pass to Mining Indaba that runs from February 4- 7 2019, while the top ten applicants will also receive media coverage across Unearthed’s global network.

NEWS

BRISTOW EYES RESOLUTION TO TANZANIA DISPUTE AS BARRICK GOLD STARTS NEW ERA Barrick Gold Corp, the world’s largest bullion miner, has officially begun trading as a merged entity with Randgold Resources, after the US$18.3 billion mega-deal gained final approval in December. The company’s shares will be traded on the New York Stock Exchange under the ticker GOLD, the symbol previously held by Randgold on NASDAQ. On the Toronto Stock Exchange, Barrick will continue under its ABX ticker. While the Barrick-Randgold merger has created a sector-leading miner which owns five of the industry’s top 10 Tier One gold assets, a key challenge for Barrick’s new president and CEO Mark Bristow will be to resolve a bitter tax dispute in Tanzania.

Operations at Barrick’s Tanzanian subsidiary firm Acacia Mining have been effectively shuttered since the government handed Acacia a $190 billion tax bill in March 2017. A resolution has yet to be reached as the dispute approaches the two-year mark. “This has been a very complex and challenging situation where no one has won. It’s untenable and will be resolved,” said Bristow on Wednesday. Barrick is now considering options for its stake in Acacia, including a possible sale.

African Business Network 15

AFRICAN AIRLINES DELIVER PASSENGER GROWTH DESPITE TURBULENT BUSINESS CONDITIONS November 2018 saw African airlines post growth in passenger traffic according to data from the International Air Transport Association (IATA), despite a challenging business environment. African carriers recorded a 5.7% increase in passenger demand compared to the same period in 2017, although this was down from the 6.4% growth posted in October 2018. Nonetheless, passenger traffic growth is being achieved despite economic challenges hanging over Africa’s largest economies Nigeria and South Africa and the fact that many African carriers are struggling to remain airborne.

These African airlines have struggled in the face of high taxes, airfare and cost of jet fuel, poor airport infrastructure, international competition and unfavourable policies, with the exception of high-flying Ethiopian Airlines. Africa’s contribution to the global aviation sector remains low with the continent currently accounting for only 2.2% of the global airline passenger market. IATA projects that African carriers will post a US$300 million net loss in 2019, making Africa the weakest region.

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MINING | Mining Indaba 2019 preview

African Business Network

ABN talks to Mining Indaba’s MD and director of content ahead of its 25th anniversary event

MINING | Mining Indaba 2019 preview

The Investing in African Mining Indaba is one of the biggest occasions in the international mining community calendar, and the 2019 event promises to be bigger than ever as it celebrates its 25th anniversary in Cape Town. Once again, the Indaba will bring together the largest amount of investors, mining executives and junior miners from across the globe under one roof with a key focus on championing Africa’s sustainable economic development. The organisers have built an exciting agenda that combines new themes with staple Indaba programmes, all with an emphasis on driving investment into African mining. ABN sat down with Indaba’s managing director Alex Grose and director of content Harry Chapman to get an exclusive preview of this landmark event. Alex Grose – managing director event of any industry in the whole world by Jacob Ambrose Willson: The Mining

the London Conference Awards. It wasn’t

Indaba has recently changed hands after

a question of whether we were successful,

it was acquired by ITE in October. How

it was a question of whether we fitted with

has the transition from Euromoney to ITE

Euromoney’s ongoing strategy, and we didn’t.

been managed?

So, when an approach was made by ITE they seriously considered it and eventually

Alex Grose: Firstly, I’d like to say that in

accepted.

recent years under Euromoney we have successfully turned the Indaba around, and

I now know that ITE have been looking at this

this year we were voted the best large-scale

event for years. It goes with their strategy of trying to own and operate the best large-

African Business Network scale must attend events in the world, cross-

are the DRC and Tanzania. Resource

sector. We now have a home alongside lots

nationalism is certainly something that

of other world-class, large scale events.

people wanted to find out more about.

Euromoney had several events within its portfolio, but only one or two big ones. Now

We had 34 government ministers at

we are at home with people who are used to

the Indaba last year, and I think most

running lots of large-scale events.

events would be happy with one or two. If you’re going to make an investment in

The transition is fairly simple. It shouldn’t

Africa as opposed to Canada or Australia,

mean much difference to anyone, apart from governments play a big role in that, in their a different name on the bank accounts. We

regulation, how stable they are. That is

have brought over the same management

something we saw coming through last year.

team. We haven’t lost one member of staff and we have new offices in Paddington as

The importance of sustainability was

opposed to Fleet Street.

another continuing theme. I don’t think that’s going away and its going to become

JAW: Casting your mind back to the 2018

more important, particularly with regards to

Indaba, what were the key take-homes

community engagement and beneficiation.

for attendees and for the global mining

We moved sustainability up the agenda last

community?

year and gave it a full day rather than a focus towards the end of event.

AG: The big theme of the 2018 Indaba was a growing optimism in the market, as

JAW: Have you seen that optimism from

opposed to what we had seen 12 months or

the 2018 Mining Indaba bleed into new

24 months ago, and an increasing interest in

investments, greater deals and more

governments. Maybe in the past there hadn’t project start-ups in Africa over the course been much of a focus on governments, but

of the year?

I think what has been happening recently in South Africa and Zimbabwe was very

AG: There is certainly more optimism, as

interesting for people. If more discussions

evidenced by the number of mergers and

on the role of governments in the sector

acquisitions we’ve seen this year, such as the

can reignite those countries as really good

high-profile merger between Barrick Gold

investment opportunities, then African

and Randgold Resources.

mining stands to benefit massively. But crucially over the last year or so, we have We also saw a lot of interest in resource

started to see the return of the generalist

nationalism, and people asking the question

investor. We’ve always had the investors that

what does it mean for Africa and for

are sitting on a resource fund, but maybe

investments in Africa? The extreme examples

MINING | Mining Indaba 2019 preview

in the past we lost the generalist investor to

majors, they have come off a bit from the

other areas. I think those generalist investors

heights of a few months ago.

now see resources as a must-have in their fund because of the performance of some

There are sectors that are hotter than others,

of the big resources companies. We’ve seen

such as battery metals. Everyone expects coal

a big return from the generalist investor and

to die but it hasn’t and so there will be peaks

the generalist funds, which is great for the

and troughs in different things but overall, I

industry.

feel confident but in a cautious way.

JAW: Would the return of the generalist

JAW: The Indaba is celebrating its 25th

investor confirm the notion of the mining

anniversary in 2019. How far has the

industry exiting recovery mode and

African mining industry come over the last

moving into growth mode this year?

quarter century and what impact has the Mining Indaba had on its development?

AG: It would be difficult for the Indaba and the industry to reach the highs of five years

AG: Of course, having the world’s largest

ago. I don’t know if it will ever be that big

investment event in Africa is going to help

again, because when I speak to the industry

drive capital into Africa without doubt.

and ask how it is getting on, the phrase I keep

However, it would be difficult to substantiate

getting is ‘cautious optimism’.

this and provide numbers. That is why this year, we will be confirming a bursary for a

I don’t think people are fully confident that

masters student at the University of Cape

we are in full-on growth mode. I think people

Town to look at this in a bit more detail.

are confident that the industry is recovering with commodity prices coming back, but even

One of our 25th anniversary initiatives is to

if you look at the share prices of some of the

sponsor local university students to look at

Resource Global Network

African Business Network

what the Mining Indaba does in terms of bringing more investment into Cape Town, but that’s not really the interesting thing for us. Ours is what impact do we have on corporate and government policy around Africa? The initiative is called the Indaba Scholarship at the University of Cape Town. JAW: Summarise to our readers why they should attend the 2019 Mining Indaba and what they can expect to see at the 25th anniversary event? AG: We think we have totally changed this event over the last few years under the current management team. We believe we have taken it back to the true ethos of the event, which is about driving capital into African mining, focusing on investment, mining companies and governments. The people that have attended over the last

Harry Chapman – director of content year or two have loved it and our ongoing challenge is to change the perception some people had of what the event had become four or five years ago. I want people to come back and try it, see what we’ve done to

JAW: Harry, can you summarise the mood ahead of this special 25th anniversary Indaba and explain how this milestone edition will be celebrated?

change it and engage with us to help us keep

Harry Chapman: I think the biggest thing is

changing it.

that our overall theme for the event is now championing Africa’s sustainable economic

We have the largest gathering of investors in

growth. Our theme used to be ‘where

Cape Town during the time of the event and

the world connects with African mining’,

we are really looking forward to welcoming

and while we are certainly not stopping

all our distinguished delegates, speakers and

connecting people, the theme now is more

partners for our 25th anniversary year.

about supporting the industry.

23 23

MINING | Mining Indaba 2019 preview We see ourselves as having an important

They were one of the stakeholders that

role to play in the market and in helping

were missing from the event previously

drive investment into African mining, but also

and communities are a very important

to champion sustainability and economic

stakeholder.

development as well. This ties in to a lot of themes on the continent at the moment,

We have also brought sustainability-focused

particularly in South Africa with President

content throughout the whole agenda. Even

Ramaphosa’s investment drive.

though we have a day on sustainability, that doesn’t mean that’s it. It’s on the main stage,

JAW: On the topic of sustainability, is this

in other sessions, and appears throughout

theme going to be crystallised into a day

the content of the conference.

at the Indaba or will it permeate through the entire four days of the event? HC: There will be a whole day dedicated to sustainability. This day has been moved from the Thursday slot two years ago. We convened an advisory board together including some community groups and key organisations like ICMM and the Minerals Council South Africa. They advised us on what to do and we actually brought that up to the Tuesday for the first time in 2018, but we also included a lot of community voices within that.

African Business Network

We have Newmont Mining and Asanko Gold covering resource nationalism, which demonstrates how mining companies won’t be ignoring it. We will also have independent groups involved in that discussion like the World Bank, who are acting quite closely with a lot of African governments. One of the other themes to point out is the focus on junior mining companies. That is still really at the core of the event for 2019 and is really crucial. Indaba has gone through a lot of changes over the past two years since our JAW: A topical theme in African mining at

management team was tasked with restoring

the moment is resource nationalism. How

it to a fully focused investment event.

will this be represented at the Indaba? You’ll see a big focus on the juniors at the HC: The simple thing to say is you’ll see it

conference, one-on-one investor meetings,

being covered and talked about openly in the

enhanced content with more analyst-led

agenda with key stakeholders. We will have a

discussions, more debates in the junior

session on that on the main stage, where we

mining showcase and forum and also a

will have people like Peter Hambro talking.

battery metals day.

He is a big name in the mining sector and can talk quite openly about his experiences.

MINING | Mining Indaba 2019 preview

JAW: How is the event being laid out to

You can imagine that if you put the exhibitors

maximise deal-making opportunities for

next to the investors, you’ll get quite a nice

the junior miners?

cross-pollination of people bumping into each other. We will have about 750 investors

HC: We have something called the

and deal-makers going through the pavilion

investment pavilion, which is where all the

throughout the duration of the event.

juniors will be exhibiting. Within that we have the investor lounge which is where all

Next to that, there is the junior mining

the investors will go to do their one-on-one

forum which is where all the juniors will be

meetings.

presenting.

African Business Network

That includes the battery metals day, along

JAW: How important is the battery metals

with various analyst presentations on gold,

sub-sector to African mining at the

PGMs and many more commodities.

moment and is that being recognised by the Indaba’s 2019 agenda?

So, we’ll have all that activity happening at the investment pavilion and then separate to

HC: I think it is very important. There are

that, we’ll have the Investment Battlefield.

definitely mixed views out there on the longterm demand and how quickly it will come,

This will be smack bang in the middle of the

because its primarily being driven by electric

show floor and if you are under a $50 million

vehicles. There are a lot of differing figures

market cap, you can enter to present and

relating to supply and demand figures for

compete.

different commodities.

MINING | Mining Indaba 2019 preview

But one thing that is for certain is that the

mining companies aren’t exactly clear on

battery metals revolution is coming, we are

what the car makers want, because it’s a new

just not sure how quickly it is coming, and for

technology. We are bringing car makers and

us, we need to make sure that we cover that.

battery manufacturers together with mining companies in the battery metals day.

One of the things that we have found is that there is a gap between the production

JAW: Finally, the Mining 2050 theme is

levels of the mining companies and the

back by popular demand in 2019. How

car makers that have set the demand. The

important is it for African mining that

African Business Network said there would be $370 billion worth of additional revenue and profit to reap from digitisation in the mining sector. That to me points out how important it is. Mining 2050 is about connecting people who are focused on innovation with those who are developing the technology and having a frank discussion about where that technology needs to go and where companies need to invest. Within Mining 2050, you’ll see many mining COOs, project directors and heads of operations giving their views on future technology. You’ll see a lot of the guys who are developing that technology also taking part in the discussion. We think that is really important. We have a role to play in terms of driving innovation within the African mining sector and supporting it. That’s what Mining 2050 is there to do. We will also be looking at some big topics like future of work. As all this technology comes in and there is increased automation, what does that mean for jobs, for labour, how is that managed, how are people upskilled? These are very important there is a clear drive towards innovation

conversations that need to be had, so again

with things like automation and AI?

we are making sure we convene people to talk on that.

HC: Innovation is key. I was at an event in Geneva recently where someone picked out a McKinsey report from 2015-16, which

a j

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MINING | Minerals Council South Africa

MINERALS COUNCIL

An exclusive interview with Roger Baxter – CEO of S

African Business Network

L SOUTH AFRICA

South Africa’s rebranded Minerals Council

MINING | Minerals Council South Africa

The mining industry in South Africa finds itself in a state of flux in 2018 after its reputation as an investment destination was damaged by several allegations directed towards the government and the ministry of resources under Jacob Zuma’s ill-fated presidency. However, since President Cyril Ramaphosa’s election in February confidence is slowly being restored in the mining industry, particularly after the appointment of new Mineral Resources Minister Gwede Mantashe. One of the first orders of business for Mantashe was to publish a third version of the Mining Charter, which had been revised after a seven-month engagement process with key stakeholders. As a result of these changes taking place in the sector, there is a growing belief that a new era of growth and prosperity in South African mining could soon commence. This attitude is personified by Minerals Council South Africa, who recently rebranded to mark a break from the past.

Roger Baxter – CEO

African Business Network Jacob Ambrose Willson: Roger, first talk

South Africa’s mining sector and to what

me through the decision to rebrand to

extent have the organisation’s purpose

Minerals Council South Africa. Did you

and values remained the same through

feel that, with the changes taking place in the rebranding? South Africa and in the mining industry, it was the right time to move forward with a RB: The Minerals Council is well aware that new name and logo?

a new logo and name will not create a new legacy. Rather, the rebranding is a reflection

Roger Baxter: Since it was first formalised

of the organisation’s and industry’s changing

1889, the organisation has undergone a

efforts and aspirations that have developed

number of name changes in its history which over time. have always coincided with mining and political developments in South Africa.

In all that the Minerals Council does, we will endeavour to represent and lead members

On May 23rd 2018, the Chamber of Mines

in a way that reflects our vision and values.

of South Africa was formally renamed the

More than that, through our membership

Minerals Council South Africa (Minerals

compact, we will hold members accountable

Council), unveiling a new logo and brand

for the commitments that the Minerals

identity. The decision to rename the

Council and our members have made.

organisation was taken by the Chamber of Mine’s Council in 2017 in line with our

The Minerals Council’s vision is to ensure that

changing face, ethos and role.

‘mining matters’, in a positive sense, for South Africa, for companies, employees, mining-

The decision was not taken lightly and

affected communities and the country as a

followed extensive research undertaken by

whole.

a leading South African brand agency. While it was acknowledged that the Chamber of

Its mission is to play a leadership role in

Mines has had a long history of contribution

enabling the South African mining sector

to the South African mining industry, it is

to achieve its real potential for investment,

also understood that there are negative

growth, transformation and development in

associations with its past.

a socially and environmentally responsible manner.

The Council was of the view that it was time to signal clearly that this industry is moving

Members are obliged to conduct their

forward, building a new legacy and creating a business according to the agreed Minerals future all South Africans can be proud of.

Council values, dictating the minimum standards of conduct required of them in

JAW: In what ways will the Minerals Council look to advance the position of

order to become a member of, or remain a

MINING | Minerals Council South Africa

member of, the Minerals Council. The five

Minister Mantashe is, in the Minerals

values of the Minerals Council are:

Council’s view, a man of integrity and dignity, and who brings with him a sound and

•

Responsible citizenship

fundamental knowledge of the industry.

•

Respect

He is a person with whom our industry has long held a constructive and respectful

•

Trust

relationship. He is an extremely tough negotiator, demonstrated both during his

•

Honesty

time as general secretary of the NUM and in his subsequent political positions.

•

Accountability These attributes have been demonstrated

JAW: How closely has the Council worked

during the engagements over the new Mining

with the government since President

Charter published in September this year.

Ramaphosa’s election in February and what changes have you noticed in your

Furthermore, Minister Mantashe has

cooperation after the appointment of

demonstrated his sincere commitment to

new Mineral Resources Minister Gwede

working with the mining industry to ensure

Mantashe?

that our industry regains its rightful position as a key flywheel to the engine of the South

RB: We appreciate the restored relationship

African economy and there have been

with government the industry has enjoyed

a number of engagements between the

since February this year. The Minerals Council Minister and his team and industry leaders has undertaken numerous meaningful

of various mining sectors to discuss the

engagements with the Mineral Resources

challenges faced by these sectors and to

Minister since then, as well as with the

find solutions that will ensure the long term

President, and looks forward to many more.

sustainability, growth and transformation of the mining industry into the future.

African Resource Business Global Network

The Minerals Council welcomes President

of South Africa. His continued emphasis on

Ramaphosa’s interventions on key issues

good governance and growing the economy

related to the economy as a whole and the

are vital for the country.

mining industry in particular. JAW: South Africa recently gazetted a The swift and decisive action taken by the

revised version of a new Mining Charter,

President in a number of critical areas is a

following months of consultation with

clear demonstration of his commitment to

industry stakeholders. What is the

ethical leadership and governance in state

Council’s verdict on the updated charter?

institutions, to addressing the structures, effectiveness and governance of state-owned

RB: In summary, the Minerals Council,

enterprises, to recognising the importance

on behalf of its members, welcomes the

of minerals and energy to the South African

publication of the Mining Charter and broadly

economy, and to re-imagining the future

supports its intentions and content.

MINING | Minerals Council South Africa This new Charter is the product of substantial

found itself in choppy waters in recent

engagement between key stakeholders and is

times but pulled out of recession in Q2

a compromise that reflects different difficult

of 2018. Do you feel that, under new

choices that have been made.

government direction, the industry is on the brink of a full recovery? What else

This Charter provides a better balance

needs to be done by key stakeholders to

between the mutually reinforcing concepts

ensure recovery and growth?

of promoting competitiveness and transformation.

RB: The investment environment is looking up. However, there are also deep challenges

The Minerals Council considers this charter to

that we face which we can turn around.

represent a policy instrument that provides a clear and durable framework for securing

We are making good progress on some of the

a transformed industry with meaningful

obstacles: regulatory and policy uncertainty,

broad-based economic empowerment

and corruption in the regulatory system.

within which the critical goals of growth and

Engagements with the DMR Minister and

competitiveness can realistically be achieved.

his team recently show an understanding of the need to get to grips with addressing

Nonetheless, the Minerals Council remains

infrastructural constraints.

concerned about some key issues, specifically regarding the limited applicability of

Trust with the regulator is being restored.

continuing consequences of past transactions Challenges in the area of rising costs, and on disposal of BEE shareholding, the

in particular in administered prices will be

treatment of renewals of mining rights as

more difficult, but again the new government

new rights, the practicality of the Inclusive

is addressing the challenges even as their

Procurement provisions relating to local

enormity is being acknowledged.

content targets for mining goods, the targets for services, and the turnover threshold for

What the industry needs is:

junior miners. •

A shared vision of the mining industry

•

Ethical leadership and good governance

•

Policy and regulatory certainty and a

The Minerals Council is engaging Minister Mantashe on these unresolved issues. It is also hoped that greater clarity and certainty will be obtained towards the end of the year, as the guidelines for implementation are

competitive environment

developed. • JAW: The national mining industry has

Available, efficient, cost-competitive and reliable infrastructure

#MakingMiningMatter

OUR ‘BIG FIVE’ Responsible citizenship

Respect

Trust

Honesty

Accountability

The values that steer us and our members in creating a new legacy for the South African mining industry. Distinguished by investment, growth, transformation and development in a socially and environmentally responsible way.

@Mine_RSA

www.facebook.com/Mine

Minerals Council South Africa

www.mineralscouncil.org.za

MINING | Minerals Council South Africa

•

Improving productivity and

companies, suppliers, investors and a range

competitiveness

of other stakeholders.

Creating a ‘greenfields exploration boom’

JAW: Key themes of the 2019 Indaba range from resource nationalism to

The industry is encouraged by the approach

sustainability and gender equality in

of the new political leadership, and we in the

mining. What are you most looking

industry are committed to playing our part.

forward to discussing with the countless companies, executives, ministers and

JAW: The Investing in African Mining

more stakeholders present at the event?

Indaba returns to Cape Town for its 25th anniversary year in February.

RB: These are all critical issues for South

How beneficial has this major industry

Africa’s mining industry, and doubtless, too,

gathering been to the South African

for our peers elsewhere on the continent.

mining sector down the years? We look forward, too, to discussions on It has been, and remains, a most important

the state of the commodity markets and

forum for discussion on key issues affecting

how this will determine the way forward

the industry and for the opportunities it

for the industry, the importance of the

provides for interaction between mining

junior/emerging miner sector as well as the

African Business Network

modernisation of the industry in various

was to return to the top quartile of the most

respects.

attractive mining investment destinations.

JAW: Finally, what is your outlook on

This could create another 200,000 jobs in the

South Africa’s mining industry in 2019 and

economy with 50,000 direct jobs created in

what will the Minerals Council be doing to

mining alone; increase output, exports and

ensure the sector is working towards its

procurement substantially; grow direct and

2030 target of doubling real investment in

indirect taxes, and royalties paid to the fiscus.

mining? The mining industry would also be in a RB: Along with policy certainty, the

better position to increase its contribution

development of a competitive strategy for

towards infrastructure development

mining is crucial to encourage investment in

and social projects in mining-affected

the industry.

communities. It remains a truism that if mining succeeds, the country succeeds.

South Africa’s mining investment could almost double in four years if South Africa

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COLUMNS | Michael Cronwright

A NEW ENERGY

Considering Africa’s bright prosp

African Business Network

Y IN AFRICAN EXPLORATION

pects in the booming critical materials mining space by Michael Cronwright

COLUMNS||Ian Michael Thomson Cronwright 46 COLUMNS

A lot of the recent activity in the exploration industry in Africa is driven by the global adoption of alternative energy generation and storage technologies, with a particular focus on lithium, cobalt, tantalum, tin, vanadium, and nickel. As a result, I have had the privilege of working on some interesting lithium, tin and tantalum deposits like Manono, Rubicon/Helikon and Kamativi and visited many of the pegmatite belts in Africa including those in Mozambique, Namibia, Zimbabwe, Uganda, Rwanda, Burundi and South Africa. Critical materials (which include the critical metals) are materials considered particularly

These metals cannot readily be substituted

important in the technology industry and

and are seen as having strategic value by

emerging innovations, amongst other

governments and industries that are focused

industries, and defined on the basis of

on de-carbonising the energy sector and

their economic importance and supply risk.

maintaining their technological edge.

Technologies include smart devices, wind turbines, LED lights, electric vehicles, power

The recent correction in the lithium

generation and off-grid storage, all of which

carbonate prices, to around US$12,000-

require metals such as tin, tantalum, rare-

15,000 per tonne (p/t), from the heady levels

earth metals, lithium, cobalt, vanadium and

earlier in the year at around $20,000 p/t,

nickel.

is still well above the long-term average of around $5,000-6,000 p/t from 2005-2015 and

Resource GlobalNetwork Network 47 African Business

MICHAEL CRONWRIGHT Michael is the critical metals principal consultant at the MSA Group. He has 19 years’ experience in African geology and exploration across a variety of commodities and significant exploration project management experience.

$7,500 p/t in 2016. It comes as a timely reality check to those companies with small subeconomic projects in challenging jurisdictions, and a reminder that commodities’ high prices at times are not sustainable and often revert back to their long-term averages; in those cases, only the projects on the lower end of the cost curve make it. What is indisputable, however, is that there is a definite trend of all major motor manufacturers committing to EV technologies

He is a QP/CP in lithium, tin and columbo-tantalite. Michael has a M.Sc. in Exploration Geology from Rhodes University with a dissertation reviewing the pegmatites of the Alto Ligonha Pegamatite Province in Northern Mozambique. He started his career at the Council for Geoscience in 1999 where he was involved in World Bank mapping projects in Mozambique and Madagascar. In 2006 he moved into the geological consulting industry and since 2013 has been with The MSA Group.

COLUMNS | Michael Cronwright

”Africa’s track record in the g to be sniffed at with Zimba lithi

critical m

in some form or other and governments

with predictions of supply shortfalls are

committing to green technologies. Many

driving a search for new lithium, tin, cobalt

governments and major cities have

and nickel resources in Africa (and the rest of

announced ‘bans’ on diesel and internal

the world).

combustion vehicles, some starting as early as 2025. Despite these not being legislated it

Many of the historic pegmatite belts

does demonstrate a move to a greener future known for their tin, beryl and tantalum and cleaning up the pollution that plagues

mineralisation are being revisited for their

cities like Mexico City, Paris and London.

lithium potential by junior exploration companies from London, Toronto and Perth.

Beijing has already started the process with

Africa’s track record in the global lithium

the electrification of its public transport

market is not to be sniffed at with Zimbabwe

system. In Norway over 50% of new car sales

being the 5th largest lithium producer in

in 2017 were electric. The current demand

the world with all production from the

and forecasted increase in demand together

Bikita Mine in the form of petalite for the

Resource GlobalNetwork Network 49 African Business

global lithium market is not abwe being the 5th largest ium producer in the world” Michael Cronwright, metals principal consultant

for the Chinese market and is also looking at producing lithium carbonate in country rather than exporting a mineral concentrate. This is a trend we’ll probably be seeing a lot more of particularly with some of the more isolated projects with access to power. MSA is also seeing many junior exploration companies getting involved in projects with the view to be able to produce in the short term and provide returns to their shareholders. They are probably better described as junior miners. There are numerous other lithium projects through Africa including the old tin mines at Kamativi and Manono, the pegmatites of the Alto Ligonha Pegmatite Province in Mozambique, the Northern Cape pegmatites, the pegmatite belts in Ghana, Nigeria, and Cote d’Ivoire. Many of the Chinese lithium convertors have also taken positions in many of these projects.

ceramic and glass market and now looking at producing spodumene concentrate for the

Juniors are also looking into the reprocessing

battery market.

of old tailings dumps, examples being the lithium-bearing tailings at Kamativi and Uis.

Consequently, Zimbabwe has seen a lot of

Slag and waste dumps are also being looked

activity with many juniors taking positions

at for nickel, cobalt and ferrochrome. Some

over the old beryl and tantalum mines in the

of these projects will require innovative

Archaean greenstone belts with Prospect

approaches to their success but represent

Resources’ Arcadia lithium project being

some of the low hanging fruit in the industry

the most advanced exploration project at

if executed successfully.

the moment, looking at producing lithium carbonate within Zimbabwe. Desert Lion

Another important consideration for many

Energy’s lithium project at the old Rubicon

exploration and mining companies is the

and Helikon mines in Namibia has recently

production of by-products such as feldspar

produced lepidolite concentrate destined

or tin and tantalite concentrates from the

COLUMNS | Michael Cronwright

lithium deposits, similarly some of the tin and

However, with concerns over ethical sourcing

tantalite projects like Afritin’s Uis Tin Mine,

of cobalt, tin and tantalum, many juniors,

focused on the hard rock, could potentially

miners and technology companies are

produce lithium concentrate as a by-product.

looking at innovations through blockchain technologies to ensure ethical sourcing or

Other commodities in the spotlight with the

looking at replacing the cobalt with nickel

green energy boom include cobalt, nickel

dominant cathode technologies (which Tesla

and vanadium which have seen a significant

is currently in the process of doing).

rise in price over the last 12 months. Cobalt in particular is used by Tesla and Apple

Recent bans on cobalt concentrate exports

in their battery cathode technologies and

from Glencore’s Katanga Mine, in the DRC,

has attracted a lot of interest from juniors.

due to high uranium content further adds to

African Business Network can leverage off this and play a bigger role in the value adds to its mineral endowment. With the bubbles of the recent past fresh in the minds of many explorationists, backing the right project is critical; the ability to flip projects is not as simple as it was in the past with investors being spoilt for choice and a lot more discerning and commodity agnostic. In my opinion the junior exploration company mentality is slowly being replaced by that of a junior miner with a more medium to long term view on projects with a view to actually being a producer. A good project isn’t always about being bigger and/or higher grade. It is about having the right management team that can think outside the box in terms of fast tracking and de-risking projects, applying new technologies in the exploration process and understanding the processing aspects and potential product unique to the project early on. One example is the application of geometallurgy, which has been the buzzword the woes of cobalt producers and explorers

for the last decade or so, with many

and raises question marks on the security

companies now realising that the improved

of supply. There has thus been a focus on

understanding of the mineralogy, mineral

identifying new sources of these metals

textures, and deleterious elements is needed

outside the traditional mining jurisdictions

to determine if a project will be able to

and also a focus on metals like nickel.

produce a saleable product at a lower cost compared to other projects.

What remains to be seen is whether Africa

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MINING | Teranga Gold

TERANGA GOLD The model for sustainable development in West Africa’s gold industry

African Business Network

MINING | Teranga Gold

At the start of August, West Africa-focused Teranga Gold reported record Q2 and H1 gold production from its Sabodala Gold Mine in Senegal. Approximately 65,000 ounces (oz) of gold were produced at the site between April and June, building on similar output from the previous quarter to total 129,000 oz of gold produced in the first six months of the year. With a second mine – the Wahgnion Project in Burkina Faso – set to achieve first pour by the end of 2019 and the Golden Hill asset not too far behind, TSX-listed Teranga is within touching distance of evolving into a mid-tier West African gold producer. For president and CEO Richard Young, the key feature of Teranga’s impressive recent quarterly performances at Sabodala is that the company is consistently outperforming its reserve model. “We are getting more high grade ounces out of the mine than anticipated compared to our technical report and that is leading to better results,” he says. “This will be the third year that we have outperformed our original guidance.” The company’s management team is also highly focused on the development of

African Business Network

MINING | Teranga Gold the Wahgnion Project in Burkina Faso and

The company expects to release an updated

remains on track for first gold pour by the

mineral reserve estimate and related NI 43-

end of 2019. The company acquired the asset

101 technical report for Wahgnion during Q3.

through its all-share purchase of Gryphon Minerals in 2016.

A multi-asset company “Our entire senior management group come

In June, Teranga announced an updated

from large companies, so we are used to

mineral resource estimate for Wahgnion of

having to balance both operational and

50.5 million tonnes (Mt) at a grade of 1.51 g/t

development stage projects concurrently

for 2.4 million contained ounces of gold – a

- like we are doing with Sabodala and

33% increase on the resource estimated in

Wahgnion. We have a team with a lot of

the feasibility study released in September

experience in this area.

last year. ”Teranga’s most advanced exploration stage asset – Golden Hill in Burkina Faso – is also moving forward at a rapid pace after approximately two years of drilling and encouraging results.

African Business Network “We started drilling in Q1 2017 and are

Meanwhile, the company’s target for 2018 is

targeting an initial resource 24 months

to meet its revised gold production guidance

later. The plan is to prepare a preliminary

of at least 230,000 oz, and Young is confident

economic assessment (PEA) by the end of

that this is well within the company’s grasp.

this year or early next,” Young explains. “If we continue at the same rate, this will be “If successful, the PEA will allow us to draw

the third year in a row we have outperformed

down on the $25 million financing facility

our guidance, and if we produce more than

that we put in place to allow us to move

233,000 oz, it will mark the third consecutive

Golden Hill through feasibility study.”

year of record production.

Golden Hill is an exciting prospect for

“Hopefully, shareholders and potential

Teranga given that if advanced into a

investors can see that we are a company that

producing mine, it would propel Teranga into

is delivering.”

that coveted mid-tier gold producer status – a key long-term aim of the company.

MINING | Teranga Gold

Sharing the benefits

This year, the company received further

Some mining firms would judge a year of

affirmation of its sustainable approach from

record gold output as a success in its own

Senegal’s Minister of Mines on a recent visit

right, but for Teranga success is not possible

to Sabodala.

without mining responsibly and sharing the benefits of responsible mining with its

“Senegal’s new Minister of Mines came on

stakeholders.

board at the beginning of the year and her first task was to visit Sabodala for a mine

The company’s approach to sustainable

tour and talk to the community,” says Young.

mining was honoured last year at the annual

“When I first met her, she said to me ‘you are

PDAC Convention in Toronto, when it was

the model. We are thrilled with the way you

awarded the 2017 Environmental & Social

operate Sabodala. This is the model for all

Responsibility Award for its work in the

the mining companies in our country’.”

communities surrounding the Sabodala project.

Resource GlobalNetwork Network 61 African Business This high praise from the Senegalese

incident in Senegal. We have a great

government is indicative of Teranga’s original

relationship with our workforce and with

stance on the eve of its initial public offering

our local, regional, national stakeholders

eight years ago. Chairman Alan Hill was

and these relationships are paying huge

adamant that in order to grow the business

dividends,” believes Young. One of the

in West Africa, Teranga would have to lead with CSR and gain the trust of governments and communities in the region. “If you look at that eight-year period since our IPO, we’ve been able to operate without

MINING | Teranga Gold first things that Teranga did after taking

driven from the ground up. The communities

over the Sabodala mine was to hold an

determine the projects and our role is simply

18-month roundtable with its local, regional

to assist with the execution.”

and national stakeholders to identify their priorities. They fell into three baskets:

In youth and education, Teranga has

Agriculture and food security, youth and

supported a number of schools throughout

training and sustainable economic activities.

the district by offering a vital bursary for students to attend high schools, which are

“Our team continues to focus on those

often too expensive to attend without a form

three baskets. We spend over $1 million a

of grant.

year on local CSR activities and these are all

“This will be the third year in a row we have outperformed our guidance, and if we produce more than 233,000 oz, it will mark the third consecutive year of record production” Richard Young, president and CEO

African Business Network Meanwhile, the company’s 12 market gardens have provided increased food security and economic assurance to nearly 1,000 women in the Sabodala region. Now that this operation has matured, Teranga is working with local entrepreneurs to find additional ways to create sustainable business activities for members of the local communities.

Building a reputation

Teranga’s sustainability initiatives throughout its time in Senegal also had a direct impact on the company’s ability to make acquisitions and move into new jurisdictions. Young explains how, with respect to its acquisition of Gryphon Minerals, the government of Burkina Faso reached out to the Canadian and Senegalese governments to ascertain if Teranga was a responsible steward of the land it would be mining. Both

MINING | Teranga Gold governments had very positive things to say about Teranga because of the strong CSR work it had already done in Senegal. The company is currently focused on mitigating the impact that the Wahgnion development will have on the local communities and is negotiating the delicate matter of relocating up to 500 households over a period of five years. “It’s about working with the local communities to identify the types of home they want to live in and where they want to move. Being an agricultural region, we will provide replacement land and are working with farmers on methods that will allow them to increase their crop yield.” On the employment side, Teranga is also working with local government authorities who identify candidates with the correct skills to match available roles within the company. “We have about 300 people hired in Burkina Faso and that number is going to grow to about 1,000 as we move through construction,” reveals Young. The next order of business for Teranga’s CSR team is to commence various training programmes at Wahgnion for local staff, ahead of long-term employment in the company, while continuing to prioritise actions based on feedback from the communities. Teranga’s president and CEO believes that the world is looking more closely at sustainable development and the mining industry is elevating living standards in many developing countries.

“Mining projects hire local people well-paying, skilled jobs and teach them on the ground skills, which they can transport. Creating an educated workforce helps countries evolve over time.” With responsible mining at the core of its philosophy, Teranga is helping to drive sustainable socio-economic development across West Africa as it advances to mid-tier status in the gold production industry.

African Business Network

TSX:TGZ

a j

MINING | GoviEx Uranium

African Business Network

GOVIEX URANIUM A growing Africa-focused uranium company

MINING | GoviEx Uranium

GoviEx Uranium is a uranium development company with three advanced projects in Niger, Zambia and Mali. From these African assets, GoviEx boasts a total resource of around 230 million pounds of uranium in the ground, along with plenty of exploration upside at each property. The business was established in 2007 by Govind Friedland, the son of highlysuccessful North American mining entrepreneur Robert Friedland. At the time, Govind was living in Beijing and suffering the effects of the dangerous pollution that was engulfing the city as a result of the wide-scale burning of fossil fuels. It was at this point that Govind realised the necessity for alternative, clean sources of energy across the world and foresaw a bullish market for uranium. Not long after the company was formed, an opportunity arose to acquire five mineral licenses in Western Niger, within one of the world’s most significant sandstone-hosted uranium deposits: the Tim Mersoi Basin. By March 2013, the company had used a local drilling company named Esafor to complete 650,000 metres of drilling across the property, which had been christened the

African Business Network

MINING | GoviEx Uranium

Daniel Major explains how the company’s

A mid-tier uranium producer

cornerstone asset has progressed over the

Thus, GoviEx became a multi-asset,

last five years.

Africa-based uranium firm with three

Madaouela Uranium Project. GoviEx’s CEO

advanced development projects, and from “Just after that [March 2013], we completed

a shareholder structure point of view, the

our first pre-feasibility for the property.

company became comprised of four major

We submitted the mine application during

shareholders: Denison Mines, Govind

2015 and by January 2016 the mine was

Friedland, Cameco and Ivanhoe Industries.

fully permitted from both a mining and environmental permit perspective.”

This impressive capital structure provides a strong layer of industry knowledge from

Then in June 2016, GoviEx completed a

Denison and Cameco, two veterans of the

transaction with fellow Canadian miner

global uranium space along with another

Denison Mines, which was to prove a

experienced mining industry participant in

significant development in the company’s

Ivanhoe.

overall story. The deal saw the latter increasing its shareholding in GoviEx to 25%,

With a total resource estimate of 230

and in return, GoviEx became owners of

million pounds of uranium across its African

Denison’s other projects in Africa.

African Business Network

projects, GoviEx is set to comfortably fit into

up, they are very large and would have an

the mid-tier of global uranium assets within

impact on the market if they were to turn up

the next five to 10 years.

tomorrow.”

Major admits that none of the three projects

In the aftermath of the 2011 Fukushima

will fit into the large-scale bracket defined

disaster, the nuclear industry went through

by mines such as Cameco’s McArthur River

what Major calls a ‘cultural shock’ with panic

and Cigar Lake in Canada, but he points to

spreading through international markets. For

the fact that all of the company’s assets are

example, Japan shut down all of its nuclear

targeted towards producing more than 2.5

facilities for a full safety review and public

million pounds per annum for an extended

sentiment in Germany shifted sharply away

period of time.

from nuclear energy in favour of renewables.

“That is positive as well because we are

The result of this shift in attitudes on nuclear

already permitted for two of our projects,

energy was a drop in demand for uranium

and so when we come into production, we

across the world, which subsequently pushed

can slot in without making a major impact

the commodity price down, leaving the

on the market. If you look at some of the

uranium mining industry in a quandary.

big Canadian projects that are due to come

MINING | GoviEx Uranium

An end to the nuclear thaw?

somewhere, and the only large, clear energy baseload source is nuclear,” claims Major.

In recent years however, Major has observed sentiments changing once again, with

This realisation has been reflected in a

countries warming towards nuclear as

rising growth in nuclear demand at 3% while

a viable energy source, having received

generation levels have returned to pre-

reassurance through the widespread

Fukushima levels. “The Japanese are ramping

introduction of new safety measures and

up their re-starts. They currently have eight

protocols.

and are increasing that number, and the Chinese are on a very strong growth build at

“As renewables have tried to increase

the moment with over 15 reactors currently

their stake, there has been an increasing

under construction.

realisation that you do also need to have a baseload clean energy source from

“We have now reached the fastest rate of

Resource GlobalNetwork Network 75 African Business

reactor build for the last 25 years and new

pounds of uranium will come off the market

countries are coming onstream such as

in the next 10 years as older mines reach the

the UAE and India, who are building very

end of their life, plus about 15 million pounds

fast; importantly, the US is now proactively

of secondary feed will also come off the

protecting its nuclear reactors.”

market in the next five years.

Despite these positive developments taking

“The other risk the industry is facing is

place in markets across the world, the

the permitting process in some regions,

nuclear industry is faced with a big strain

particularly in Canada, where you’re looking

on the supply side, as a number of major

at anywhere between 10 and 20 years to

uranium mines reach depletion over the next

permit a uranium project.”

decade. This lengthy permitting process described In fact, Major postulates that about 30 million

by Major could contribute to a potentially

MINING | GoviEx Uranium

African Business Network

Daniel Major, CEO damaging lag in new supply coming online,

Key project parameters at Madaouela include

and sharply brings into focus the fact that

a 21-year mine life and production of 2.7

GoviEx has already fully permitted its projects

million pounds per annum of uranium at a

in Niger and Zambia.

cash cost of roughly US$25 per pound, with

Madaouela

pre-production capital at about $359 million; however, Major is hopeful that GoviEx

At Madaouela in Niger, the company has

can improve on these metrics in the final

completed three different pre-feasibility

feasibility through its various optimisations.

studies on the project and is now working on further optimisations before it kicks off the

The company is looking at modularising

definitive feasibility study later this year.

construction to accelerate the process and is also assessing the potential use of hybrid

“We’ve been looking at what we can do to

power at the site.

reduce consumables and reduce the size of the plant amongst other improvements, so

“Our current model takes power from Niger’s

that when we do the final feasibility study,

coal-fired national grid, but because the

it will be as optimal as we can get it,” says

project is located in the Sahara Desert, it

Major.

seems logical to leverage the 12 hours of sun a day by using solar.”

MINING | GoviEx Uranium

GoviEx also believes that a hybrid power

offtake participation. Once the strategy has

system could reduce costs on power by

been carried out, GoviEx will commence

about 25-30% compared to using the coal-

construction work at Madaouela, with the

fired grid alone, while a hybrid system would

mine slated for completion within three

also provide greater flexibility.

years.

“We have Medea Capital Partners working on

Mutanga and Falea

the debt financing for the project and have

GoviEx’s other near-term, fully-permitted

got expressions of interest from a number

project is the Mutanga project in Zambia,

of export credit agencies and commercial

which is giving the company a very nice

banks. We’ve also appointed Houlihan Lokey

problem to have. “That project is causing us

as our advisors on offtake,” he explains.

some grief because it is almost as good as Madaouela,” quips Major.

This crucial financing stage of the project seems to be in good hands, owing to the fact

Strengths of the Mutanga project include

that individuals from Medea and Houlihan

the fact that it is a relatively straightforward

were part of a former team at Société

project. GoviEx is planning to develop an

Générale who worked on debt financing

open pit, heap leach operation with very low

for several major projects during the last

acid consumption.

uranium cycle in Africa. The project also has a low CAPEX of $120 The final step of the company’s ‘fully-

million for 2.5 million pounds per annum

funded’ development strategy is project

along with plenty of exploration upside.

equity financing, after project debt and

African Business Network

The company has recently completed radon

silver and copper credits. In addition, an

and trending work at Mutanga, which has

external company had previously completed

provided a number of interesting drill

a pre-feasibility study on the project, which

targets that the company will test over the

means there is a full mine design already

coming months. Major reveals that getting

waiting for GoviEx.

Madaouela into production remains the key short-term goal for GoviEx, but he anticipates

“Overall, we have a big resource, we have

that Mutanga is only a few years behind the

permits in place and our strategy is to get

cornerstone development.

these uranium projects going in an improving uranium market. That is the headline

“It will take three years to build Madaouela,

message we want to get across to investors,”

then another two or three years to get

concludes Major.

Mutanga going, so within five years we could have two operations producing between five

“We look forward to continuing our work to

to six million pounds of uranium per annum,

advance GoviEx’s mine-permitted projects

along with another advanced project in Mali.”

in Africa, in cooperation with our host governments, stakeholders, and strategic

The Falea project in Mali is currently smaller

partners,” adds executive chairman Govind

than Madaouela and Mutanga, but it offers

Friedland.

an interesting twist in the shape of significant

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MINING |Tietto Minerals

TIETTO M Fast tracking the development of gold assets in West Africa

African Business Network

MINERALS

MINING |Tietto Minerals

Tietto Minerals successfully floated on the ASX in January 2018, raising $6 million through the issue of 30 million shares in its IPO. After seven years under private operation the decision to go public was made in September 2017 by the board of directors – whom collectively boast over a century of experience in mineral exploration. Tietto’s story began in 2010 with two projects in Liberia before expanding into Côte d’Ivoire two years later, following the conclusion of the Ivorian crisis. Since then, progress in Côte d’Ivoire has taken place at a fast pace, spearheaded by the rapid development of Tietto’s flagship Abujar gold project, where the company’s current JORC resource originates from. The first exploration licence of the Abujar project was applied for by Tietto with its

was very clear to us where the mineralisation

joint venture partner in March 2014, and by

was taking place at Abujar,” says Tietto’s

September of the same year the company

managing director Caigen Wang. “At least a

received a license for the middle tenement

portion of the mineralisation is shown at the

- which hosts the JORC Resource and

surface by previous artisanal workings.”

numerous drilling targets. Therefore, it has been somewhat fortuitous “Due to previous large-scale artisanal

for Tietto that the prior work of small-

workings around a few kilometres strike, it

scale artisanal miners across the tenement

African Business Network

has exposed mineralisation at surface,

artisanal workings clearly show part of the

particularly as Wang proposes that the

mineralisation from surface and heading

average time taken to identify mineralisation

downwards. That’s one of the main reasons

at a grassroots exploration project is usually

why we are progressing the Abujar project so

around two years.

rapidly.”

“In the case of Abujar, we save at least two

JORC Inferred Resource

years in identifying mineralisation before

The maiden JORC Inferred Resource

starting resource definition drilling, as the

estimation of 10.4 Mt @ 2.1 g/t Au for

MINING |Tietto Minerals

GET TO KNOW US AT AMSGH.COM

BRINGING MORE TO MINING 703,600 oz was delivered in December 2016

a strike length of 1,000 metres – an exciting

from 13,000 metres of drilling within a small

result indeed.

portion of known artisanal working areas in the middle tenement.

The next step for Tietto is to target a new resource area to the South of the main

Since this announcement, the company has

resource: “Our recent drilling beyond the

continued drilling several new targets within

strike of the existing JORC resource towards

the tenement with the aim of further building

the South gave us very good intersections

the resource. Over the last four years, all

and multiple drilling targets for further

drilling activity has been conducted by major

resource definition.

West African contractor Geodrill, with the most recent campaign completed in Q1 2018.

“But the few holes we drilled at a shallow depth of 50 metres gave us very good

The Q1 campaign focused on digging

intersections. The areas named Pischon

deeper holes in the current JORC Resource

South and Golikro will form our next major

area and delivered some very positive and

increase in resources.”

encouraging results according to Wang. Tietto managed to hit high grade gold intercepts at

For these upcoming drill programmes, Tietto

an extended depth of 200-250 metres over

has elected Ausdrill as its drilling partner of

African Business Network

choice. Ausdrill has been operating in West

provide a high grade gold mine is there for

Africa for many years, but only recently

all to see, but how viable is Côte d’Ivoire as a

expanded their business into Côte d’Ivoire.

mining jurisdiction?

Tietto will become their first drilling service client in the nation, when they undertake the

The mining industry was only meaningfully

next round of drilling for over 50,000 metres.

opened up to foreign investors in 2014, when a new mining code was introduced. The

Overall, the short-term target for Tietto at

new code stipulated a range of legislative

Abujar hinges on further expanding the

measures including an attractive five-year

resource, which could potentially be doubled

corporate tax free exemption for mining

or even tripled up to around two million

companies, followed by a 25% corporate tax

oz before the company commences a pre-

rate and a 3% government royalty rate.

feasibility study.

Operating in Côte d’Ivoire

“Cote d’Ivoire was already a relatively developed country in Africa, [before the new mining code] particularly in West Africa. The

With high grade mineralisation being

country has very good infrastructure thanks

identified with every additional drill

to its very developed agricultural industry.”

programme, the potential for Abujar to

MINING |Tietto Minerals

The gold mining sector is also well

the fact the artisanal mining provides the

established, with five mines currently

only means of income for many vulnerable

producing and operated by a number of

citizens.

international companies including Endeavour Mining and Randgold Resources. These

Supporting local people

mines produced approximately 800,000 oz

“In order to provide support to local people

of gold last year. “So, we do have numerous

who operate in small-scale artisanal mining,

good examples of modern mining operations

the government has set up special zones

producing gold in Cote d’Ivoire,” Wang adds.

which are only for small-scale mining licenses. So, for the major licence areas, no

Furthermore, the Ivorian Government,

small-scale mining activity should take place.

particularly the Ministry of Mines, has been working hard to manage the sensitive issue

“Likewise, within the designated areas for

of small-scale and illegal mining within the

small-scale mining activities, no company

country’s mineral belts.

is allowed to apply for major exploration licenses,” explains Tietto’s managing director.

In response to conflict-driven mining practises, the government has not been

Tietto itself is also supporting local people

afraid to use military force in order to dispel

through its company employment policy.

and close down illegal operations, however

“The first thing we did was try to maximise

the government is also acutely aware of

the local employment of our geologists and

Resource GlobalNetwork Network 89 African Business

MINING |Tietto Minerals

technicians working on the ground. Whether

Cestos projects were resumed in March 2018

they are full time or casual, they are all

after an extended hiatus.

Ivorian. The geological foundations of the projects are “Ivorian geologists have good expertise due

sound, with significant gold mineralisation

to their training and work experience with

identified over a long distance of strike from

a number of major international mining

the company’s preliminary work at both

companies that operate in Cote d’Ivoire,

projects. However, Tietto has its work set

Burkina Faso and Mali,” he continues.

out in Liberia, with both projects located in a remote part of the country.

“We have a local specialised technical team of personnel available in the country which is

Wang admits that infrastructural

our first choice for our employment.”

development in the region is minimal,

The Liberian projects With the rapid pace of development taking

therefore significant improvements will need to be made to support the potential gold mining operations.

place in Cote d’Ivoire, it is easy to forget that Tietto’s original projects are in neighbouring

“Nonetheless, the progress has been quite

Liberia. Field activities at the Dube South and

significant this year and we are going to

African Business Network

announce our results in September/October.

into other parts of the region, but for now the

Our aim for the Liberian projects is to define

MD is keeping his feet firmly on the ground.

a minimum of three drilling targets for each project before the next dry season which is

“As a mining engineer myself, I believe that

November this year.

the company’s primary purpose is to build a producing mine. That’s our current aim

“At that time, we will arrange a test drill

and we are quite confident that with the

campaign for both Liberian projects with

advanced status of our Abujar project and

multiple drilling targets on each project.

the related upside there, as well as the two

Overall, we are confident that we should have

Liberian projects, we will be able to build a

good success on each of the two projects.”

mine or mines in West Africa in a few years’ time.”

As a West Africa-focused junior explorer, Wang reveals that Tietto does harbour motives to expand its mineral exploration

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RENEWABLE ENERGY | Lake Turkana Wind Power

Asset rich leverage to gold, silver and copper

LAKE TURKANA Africa’s largest wind farm connects to Kenya’s national grid

African Business Network

RENEWABLE ENERGY | Lake Turkana Wind Power

At the end of October, the last of 365 turbines at the Lake Turkana Wind Power (LTWP) Project was fully commissioned and plugged into the national grid, marking the completion of this enormous project that remains Kenya’s largest ever single private investment. Full construction of the 310MW capacity wind farm was completed by mid-July 2017, however the company had been unable to generate and evacuate power due to ongoing delays to the construction of a 428 km transmission line connecting the project to the grid. The transmission line was finally energised on September 24th, providing the greenlight for LTWP to begin connecting the turbines to the grid. This moment, long in the waiting, resembled a major milestone in the life of this project that is now officially Africa’s largest operational wind farm.

A challenging period

Nonetheless, the delayed construction of the transmission line created a difficult situation between the company on one hand and the national distribution utility Kenya Power and Lighting Company (KPLC) and the Government of Kenya (GoK) on the other. The difficulties concerned the ‘take-or-pay’ principles contained in the 20-year power

African Business Network

“If you take the period from September 24th – October 27th, we recorded an average capacity factor of 80%. That is phenomenal when you compare it to other wind farms around Africa and the world” - Rizwan Fazal, Director

RENEWABLE ENERGY | Lake Turkana Wind Power purchase agreement (PPA) whereby all risks pertaining to a transmission interconnector (TI) delay were not to be borne by LTWP. Consequently, LTWP lodged its claim to some GoK TI Delay Deemed Generated Energy (DGE) payments in order to meet its repayment obligations under the complex project financing arrangements. Amendments were eventually made to the PPA whereby a partial sum (€46 million) of the payment was paid in order for LTWP to repay its September 2017 and March 2018 semi-annual debt instalments, which amounted to just over €74 million in total – a significant sum by any estimation. The balance of €81 million was deferred for repayment over 6-years by way of a minor tariff increase of €0.00845 euros per kWh. LTWP’s project finance advisor and director Rizwan Fazal describes the period between July 2017 and September as a very awkward and antagonistic time from a government relations, lenders and general population perspective. LTWP’s claim to GoK TI Delay DGE Payments – even though it was a negotiated settlement, was seen and perceived negatively by the electricity consumers who were grappling with increased power bills and would eventually be shouldering the cost of the TI delay. The GoK was a stellar party and clearly understood the need for and importance of honouring the payment obligation. Eventually, it was a win-win for all parties. The GoK set itself apart as a most credible counterpart, says Fazal. “It has been difficult for the shareholders

African Business Network of the company, who have lost nearly 18 months’ worth of revenues. But from every perspective there is now great relief that the transmission line has been built, hot commissioning has taken place and power is being fed into the grid. It feels great.” During the long hiatus, the company had to enter into service agreements with its turbine supplier, which essentially acted as preservation contracts up until the point when the transmission line was in place and hot commissioning could occur – meaning tests that require a live connection. In addition, when it was finally able to feed power into the grid, LTWP was confronted with moving goalposts in Kenya’s energy network; several new generating plants had come online since January 2014 – when the company first undertook load and system studies. In addition, some transmission infrastructure that was anticipated had not materialised. These changing parameters contributed to system challenges both to and from LTWP. “However, one pleasant surprise has been the ability of the plant to surpass our expectations in terms of output. We have had capacity factors that are North of 90% on a fair number of occasions already,” Fazal reports.

Beating capacity expectations

The company previously anticipated that the wind farm would operate at an average of 62% of its total 310MW installed capacity, so to be achieving an average of over 70%

100

RENEWABLE ENERGY | Lake Turkana Wind Power

Resource GlobalNetwork Network 101 African Business

“Lake Turkana Wind Power demonstrated that from a logistical perspective, large-scale projects can be implemented in remote parts of Africa.”

102

RENEWABLE ENERGY | Lake Turkana Wind Power

African Business Network

consistently so far is a great result for LTWP. It has always been known that the location of the wind farm, nestled between two vast mountain ranges in Kenya’s far North, would provide some of the best conditions in the world for generating wind energy. Detailed mast measurements consistently indicated that this was an area of constant, uni-directional wind at high velocities. But much of this understanding was purely theoretical, so to see the wind farm outperforming its target capacity on a regular basis is a very welcome return for LTWP. “If you take the period from September 24th – October 27th, we recorded an average capacity factor of 80%. This corresponds to around 14.5 metres per second average on the power curve. That is phenomenal when you compare it to other wind farms around Africa and across the world.”

Staying in Kenya, the wind farms located in the Ngong hills near the capital city of Nairobi perform at around 37% capacity, according to Fazal. In South Africa, wind farms hover between 45-50% on average, and the UK’s entire wind sector performs at 28-35% of its total capacity. “Lake Turkana is blessed with quite a phenomenal resource and it will come into play quite nicely as the energy is baseload and very predictable,” Fazal believes. While the distinctive configuration of the land in the area makes it highly conducive for generating wind energy, LTWP and its construction partners can be forgiven for highlighting the major challenges posed by the project’s remote location. The project sits at the Southern tip of Lake Turkana in Loiyangalani sub-County, Marsabit County region, and is far removed from Kenya’s bustling urban centres –

103

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RENEWABLE ENERGY | Lake Turkana Wind Power

African Business Network approximately 750 km away from capital city Nairobi and just under 1,200 km from major port city Mombasa.

The cradle of mankind

The Lake Turkana region, which is best known for being ‘the cradle of mankind’ – after a number of important archaeological finds - is sparsely populated and home to only a small nomadic population. As such, the area had virtually nothing in the way of infrastructural development prior to LTWP commencing work on the project. Therefore, the first task of the construction phase was to build 208 km of public road just to provide access to the site. Next, 130 km of road was laid within the wind farm, along with 180 km of overhead lines within the 33KV network. The 365 turbines had five different foundation designs each with around 57 cubic metres of casting and were spaced across 40,000 acres at the project site,

which was an 18-hour truck drive away from Mombasa - where the turbines and a large number of equipment had to be transported from. However, LTWP and its partners worked miraculously over the 30-month construction period to overcome these obstacles, creating a highly efficient supply and logistics chain that allowed the project to be completed on time and on budget. “We had anticipated completing on January 26th, 2017 and we were ready with the first unit group of 119 turbines on January 27th. We were absolutely on budget, not a penny above during the entire construction period, which in itself was quite a miracle for a project of this scale. “It all comes down to people, teams, the partners and efficient project management. Across the board, the teamwork between LTWP and the EPC contractors – Vestas, Siemens, RXPE of China, Civicon and Southern Engineering Company of Kenya (Seco) was miraculous.”

105

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African Business Network 107

Despite facing initial challenges around seeking labour during the construction phase (primarily due to the inhospitable nature of the location) there was a big push towards local employment by LTWP, who ensured that the contractors were flexible with regards to incorporating local labour into their teams. Behind this local employment push was the company’s ambition to develop the local area by enhancing skills and transferring knowledge, in the hope that this would have a domino effect post-construction in terms of developing vocational businesses and industries. “At the peak we had 1,254 employees in the company, of which approximately 800 were local from the area. Most of the balance were from Kenya with around 10% being foreigners or expatriates. There was a lot of knowledge transfer, and today LTWP has employed a lot of those workers who were

trained by the contractors, including Vestas, Siemens and Seco, into full time roles at LTWP.”

Winds of Change

This community-driven mindset at LTWP has been further crystalized through the formation of the Winds of Change Foundation (WoC). Established in 2015, WoC is a 100% LTWP-owned subsidiary that implements LTWP’s CSR programmes and aims to improve local livelihoods within the 20,000 km² catchment area of the wind farm. The foundation focuses on enhancing employability and improving access to healthcare and water, with a key feature of its work so far being the ability to deploy the services of former LTWP employees in community projects.

108

RENEWABLE ENERGY | Lake Turkana Wind Power

“When we wish to build a water facility or any other project, we are finding that lots of those previous employees of project partners are being awarded those contracts and are able to now supplement their income through our outreach projects.” The projects started with fairly simple bore hole exercises for water storage, but WoC’s scope of work has gone on to include constructing dispensaries, schools, laboratories, IT centres and vocational training centres. One of the standout projects has been the conversion of a youth centre to an IT centre in the town of Korr, Marsabit County. Prior to the conversion, residents would have to travel 300 km just to complete exercises as simple as sending or printing electric documents. “Now, residents can access an IT facility from the heart of their community. This IT centre also demonstrates the public-private partnership nature and the coming together

of multiple parties including WoC and investors, working in close cooperation with Marsabit County Government. “Even in its infancy, WoC has been successful in being a catalyst towards sustainable development. This is something we want to continue as we now start to generate power and have put aside a substantial allocation of revenues towards the CSR programmes undertaken by WoC.”

A litmus test

The LTWP project can be viewed as a litmus test for whether Kenya and other subSaharan African countries are ready for clean energy infrastructure projects of a comparable scale. For Fazal, the proof is in the pudding at Lake Turkana. “Lake Turkana was able to rely on all of its contractual obligations, including the rule of law. It demonstrated that from a logistical perspective, large-scale projects can be implemented in remote parts of Africa.

African Business Network

The fact that it was done on time and on budget is proof that well-structured, wellimplemented projects are key. “Kenya has proven it is not an island and is part of this wider financial and global market. People can look to Kenya with confidence that their investments will be protected and that contracts will be honoured, even under the most strenuous circumstances. “But there are lessons to be learned. Lake Turkana’s implementation has been by no means easy. We have had our fair share of pain, but on the whole the success of Lake Turkana will be replicated and will inspire others to develop projects in the country and in the region.”

Kenya, believing that renewable energy projects should be introduced in a tapered manner to prevent energy supply rapidly outstripping demand, which would send energy prices higher for consumers. Secondly, the wholesale adoption of intermittent renewable energy would need to be accompanied by upgrades to the network to prevent voltage instability, which has already occurred after the introduction of power from LTWP. “I think for investors the focus is going to move towards the technical and regulatory aspects of these projects and those areas need a lot more planning and a coordinated approach.”

However, Fazal makes a stark warning against the wholesale adoption of renewables in

a b

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ONLINE NOW WWW.AFRICANBUSINESSNETWORK.CO.ZA

112 APPOINTMENTS AND EVENTS 112

APPOINTMENTS Transnet makes Tau Morwe its acting group CEO South Africa’s state-owned freight company Transnet has appointed Tau Morwe as acting group chief executive following the removal of Siyabonga Gama from the position. Gama was axed after investigations implicated him, former CEO Brian Molefe and Gupta associates in a scandal relating to the purchase of 1,064 locomotives. Morwe first joined Transnet in 1997 and has served as CEO of three of the Transnet divisions: National Ports Authority, Freight Rail and Port Terminals (TPT). SABC appoints new group CEO and CFO The South African Broadcasting Corporation (SABC) has appointed Madoda Mxakwe as its new Group CEO and Yolande van Biljon as the new CFO. “Madoda Mxakwe brings to the SABC a wealth of a broad combination of great skills and expertise derived from senior executive positions,” said SABC’s chairperson Bongumusa Makhathini. He also praised the experienced van Biljon: “She has made a meaningful contribution during her tenure at Denel Dynamics, where she participated in the turnaround of the organisation.” Eskom makes eight senior appointments to operations team Cash-strapped South African utility Eskom has appointed eight senior executives and managers to a new operations team. Segomoco Scheppers has been made group executive for transmission, Lindi Mthombeni is acting group executive for distribution and Naresh Singh is acting general manager for Africa strategy, to name a few. The move comes not long after Eskom axed at least 10 senior executives in a bid to trim employees and minimise its bloated top management. Charles Molapisi handed group chief technology role by MTN MTN Group has made a number of new executive appointments, including that of Charles Molapisi to the position of group chief technology and information officer. Molapisi has more than 16 years of experience in both fixed and mobile telephony, working for Telkom and Liberty Life prior to joining MTN. As a result of Molapisi’s appointment, Philip van Dalsen will replace him as CEO of MTN Zambia having formerly led MTN Cyprus in the same role.

African Business Network

EVENTS Investing in African Mining Indaba February 4-7 Cape Town South Africa Africa Tech Summit February 13-15 Kigali Rwanda Women in Tech Africa March 18-19 Cape Town South Africa International Renewable Energy Congress (IREC) March 26-28 Sousse Tunisia 2nd Annual Future Banking East Africa Summit April 10-11 Nairobi Kenya

Want to promote your event? E-mail your event to jacob@africanbusinessnetwork.co.za

113 113

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