The Brief

A monthly wrap-up of News Worth Knowing

OSINO PUMPS N$1.4BN INTO ITS NAMIBIA TWIN HILLS PROJECT

Osino Resources says it has invested at least N$1.4 billion (US$75 million) in its Twin Hills Gold Project in Namibia over the past five years, specifically towards conducting a Definitive Feasibility Study (DFS) for the mining project.

According to the findings of the DFS released last month, Osino Resources will need to invest N$6.8 billion (US$365 million) in the development of the gold mining project.

"On Thursday, Osino published its DFS for the Twin Hills Gold Project in Namibia. This 874-page document reflects approximately US$75 million spent over five years on intensive drilling, technical studies, salaries, fees, etc. It involved approximately 120 Osino staff, 12 specialist consultants, and numerous sub-contractors across seven countries and four continents," stated Heye Daun, Osino's co-founder, President, and CEO, in a social media post.

The Canadian gold mining firm projects that the mine will commence production by the end of 2025 or early 2026.

The study indicates that the mine, with a life expectancy of 13 years and a processing capacity of five million tonnes per annum, will have a Net Present Value (NPV) of N$13.8 billion (US$742 million) pre-tax at a gold price of US$1750/oz, and N$8.9 billion (US$480 million) post-tax at the same gold price.

The DFS, prepared by Lycopodium Minerals Canada Ltd, envisions a low-risk, technically simple open-pit mine utilising contract mining and feeding a conventional carbon-in-leach metallurgical plant processing 5mtpa of mineralised material.

Osino Resources, which has received provisional confirmation from the Ministry of Mines and Energy for a 20-year mining license for its Twin Hills gold project, expects the mining project to employ approximately 750 people, with the majority being Namibian and many from local communities.

Since its discovery by Osino in August 2019, the company has completed more than 220,000m of drilling and advanced technical studies on the project.

Osino Resources in February announced that it had received eight project finance offers from credible institutions to finance the construction of its wholly owned Twin Hills Gold Project in Namibia.

VEHICLE SALES INCREASE BY 51% IN JUNE

Namibia recorded a 51.4% increase in vehicle sales to 1,320 units in June this year compared to 872 units recorded in June 2022, latest data reveals.

According to Simonis Storm Securities’ vehicle sales report, new vehicle sales have skyrocketed, recording remarkable vehicle sales in June, marking the highest sales volume since July 2017, when 1,346 units were sold.

Simonis Storm Researcher Angelique Bock says this represents a 34.4% month-on-month surge.

"This positive trend is a significant improvement from the figures recorded in May 2023 (982 units) and April 2023 (1,004 units). Commercial vehicles accounted for 56.06% of the total sales, while passenger vehicles made up the remaining 43.94%," Bock said.

Bock emphasised the significance of the increase in commercial vehicle sales, stating "new vehicle sales were mainly driven by commercial vehicles, which saw a significant improvement of 68.6% year on year and 55.1% month on month."

The researcher remarked that passenger vehicle sales posted growth of 35.8% year on year and 14.9% month on month, with "this positive growth reflecting a renewed consumer interest in purchasing passenger vehicles."

Bock also highlighted the impact of the current economic conditions on vehicle prices, saying: "New car prices in Namibia increased by an average of 6.4% in 1H '23, up from 4.0% in 1H '22 as the effects of high vehicle inflation and high interest rates continue to exert pressure."

She further explained that: "Consumers have responded by adopting a buying-down trend, shifting towards purchasing less premium models or opting for vehicles in lower categories in the passenger car segments."

Meanwhile, in the rental market, Bock noted that sales comprised 10.04% of the total units sold in June.

"This increase in figure demonstrates the heightened activity in the car rental space as rental companies expand their fleets in response to tourism activity picking up." She added, "While the national fleet is still below pre-Covid levels, we believe the figures are now closer to 75%-80% of pre-pandemic levels."

She asserted that the surge in vehicle sales is seen as a positive sign for the Namibian economy, indicating increased economic activity and consumer confidence.

"With the government also participating in the market by purchasing vehicles, further growth in the industry is anticipated. These sales figures are encouraging as economic activity continues to bolster. More encouraging is the government's participation in this market once again, with some orders currently in the market," the researcher said.

NAMIBIA’S BANKING SECTOR WORTH N$173.2BN IN Q1

Namibia’s banking sector asset base grew to N$173.2 billion during the first quarter of 2023, after showing a 5.3% growth, an official has said.

According to the Bank of Namibia’s governor Johannes !Gawaxab the banking sector liquidity ratio stood at 19.1%, an increase of 17.8% in the last quarter of 2022.

He attributed the increase to improved diamond sales, government spending, capital inflows and subdued private sector credit extension.

“The banking sector's balance sheet growth remained strong, reflecting an improved liquidity position and adequate capital levels. The banking sector maintained capital levels to meet the regulatory requirements and absorb potential losses,” the governor said, following the Macroprudential Oversight Committee meeting.

Similarly, the Non-Banking Financial Institutions (NBFIs), also remained financially sound, with the investment assets returning a growth rate that coincides with the financial market recovery.

"The assets held increased by 4.3% on a quarterly basis to N$381.8 billion during the first quarter of 2023. The increase was mainly due to growth observed in the long-term insurance and retirement fund subsector," !Gawaxab said.

According to Macroprudential Oversight Committee, retirement funds were solvent with a funding position at 101.2%, thus remaining above the prudential limit.

Similarly returns on investments increased to 4.6% in the first quarter of 2023 from 3.9% recorded in the last quarter of 2022, "recovering from the bearish first three quarters of 2022."

"However, it is not expected that retirement funds’ viability will be affected in the short to medium term, given the sufficiency of reserve levels. Similarly, the long-term insurance (LTIs) sub-sector remained solvent with adequate capital reserves. The claims in the LTI sector continued to recover from the elevated levels observed in 2021, which were as a result of relatively higher mortality rates attributable to the Delta Variant of Covid-19," said !Gawaxab.

He said to support economic activity, the Bank will pursue ministerial issuance of regulations to operationalise the macroprudential policy taken.

In addition, the Macroprudential Oversight Committee deliberated and deemed it important to recommend a policy intervention on the existing loan to value regulation, considering the current macroeconomic conditions.

Overall, the central bank said the domestic financial system continues to demonstrate stability, robustness and resilience. In terms of Namibia’s real Gross Domestic Product (GDP) growth, the governor said it is expected to slow down in 2023 and 2024, mainly due to weaker global demand, contrary to the robust growth of 4.6 percent observed in 2022.

"Therefore, the domestic real GDP growth is projected to moderate to 3.0 percent in 2023 and is expected to slow down further to 2.9 percent in 2024. The moderation is mainly on account of global monetary policy tightening and the ongoing geopolitical tensions," he said.

This is further pushed by water supply interruptions at the coast, climate change and spillover effects of electricity cuts in South Africa continue to increase risks for the domestic economy.