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A Canadian Perspective on Africa

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Title: A Canadian Perspective on Africa


1
A Canadian Perspective on Africas Mining
Industry
  • Bruce Shapiro
  • President
  • Canada-South Africa Chamber of Business
  • President, MineAfrica
  • Toronto, Ontario, Canada

2
Presentation Outline
  • Expanding in Africa Canadas growing presence
  • Assessing the Challenges and Obstacles Faced
  • What Other Potential Solutions

3
Expanding in AfricaCanadas growing presence
4
Canada a Global Mining Powerhouse
  • Canada like Africa is primarily a natural
    resources country a global powerhouse in fact
  • Home to Barrick worlds largest gold company
  • Home to Cameco worlds largest uranium company
  • Home to Potash Corporation worlds largest
    potash company

5
A Global Mining Powerhouse cont
  • 57 of the worlds listed mining companies are
    listed with TSX Group company
  • Half of the 10,000 mineral projects held by TSX
    listed companies are outside Canada (1,322 or
    26.5) in South Africa)

6
A Global Mining Powerhouse cont
  • Approximately 140 TSX listed mining companies
    have projects in Africa
  • Canadian public mining companies have 1,322
    properties in Africa valued at 15 billion

7
Canada and South Africa
  • South African mining companies are among the
    biggest foreign investors in the Canadian mining
    sector ie De Beers)
  • Base metals and mineral products account for more
    than 50 of South Africas exports to Canada

8
Canadas Relationship withSouth Africa
  • Canada and South Africa are world leaders in the
    mining sector and in best practices
  • Over 40 of equipment and services purchased by
    Canadian mining companies for projects in Africa
    are sourced from South African companies
  • Canadian mining companies are the largest
    non-African investors in the mining sector in
    South Africa

9
Assets of CanadianMining Companies Abroad
2006 US64.4 billion
2001 US25.8 billion
10
92 of Canadian mining assets are concentrated in
8 African countries
  • South Africa 26
  • DRC 18
  • Madagascar 14
  • Zambia 10
  • Tanzania - 10
  • Ghana - 6
  • Burkina Faso - 5
  • Mauritania - 3

11
Canadian Mining Investments in Africa
Concentrated in 8 Countries
  • Localization factors
  • Geology
  • Governance
  • Lower geological risks compensate for higher
    political costs

Mauritania 3.0
Others 8
Burkina Faso 4.
South Africa 25.8
Ghana 6.6
Tanzania 9.7
DRC 18.1
Zambia 10.1
Madagascar 14.1
12
Africa Stock of Canadian Mining Capital Assets
2007 14,7 billion
2010 20-22 billion
100 M to 500 M
10 M to 100 M
Less than 10M
As of June 30, 2007 Sources Natural Resources
Canada
13
Sample recent projects in Africa by Canadian
listed companies
  • CIC Energy Coal Project in Botswana
  • Sherritt/SNC Lavalin Ambatovy project in
    Madagascar
  • MagIndustries in DRC and ROC
  • Homeland Energy in South Africa
  • Banro in the DRC
  • Forsys Metals in Namibia
  • First Uranium in South Africa
  • Platinum Group Metals in South Africa

14
Banro Corporation
DRC

15
MagIndustries
Hydroelectric Developments (DRC) Projected 2008
Rev. 10M
Forest Products (Eucalyptus) (ROC) Projected 2008
Rev. 25M
Kouilou Potash Project (ROC) Projected 2011 Rev.
240M
Magnesium Alloys (ROC) Projected 2014 Rev. 150M
16
Homeland Energy
17
Sherritt - Ambatovy Project
  • Reserve life of 27 years
  • Major project components
  • Mine Site near Moramanga
  • 220 km pipeline to transport ore slurry
  • Process plant near Toamasina
  • Supporting infrastructure, including port
    facilities, roads, rail lines, tailings dam and
    power plant
  • Earth works commenced in June 2007, commissioning
    to start in 2009, full production in 2012

Toamasina
Antananarivo
MADAGASCAR
18
Canadians in Africa
  • US15 billion of new projects in 15 African
    countries planned for the next 4-5 years
  • Canadian government supports mining in Africa
    EDC is currently considering in excess of 400
    million of project finance and political risk
    insurance for mining in Africa.
  • Canada brings expertise in financing,
    exploration, construction, mining and CSR

19
Canadian Support for Bulyanhulu
  • Largest gold mine in Tanzania
  • Project cost in excess of USD 400 million
  • Barricks first major foray into Africa
  • First major project financing in Tanzania
  • Bank requirement for full PRI in a challenging
    market
  • Underwriting a strong project in an unstable
    region
  • EDC provided significant PRI capacity to meet
    financing requirements - 234,000,000
  • Acted as co-lead arranger and insurer to access
    multilateral and private sector support
  • played lead role in underwriting, due diligence,
    and policy negotiating and documentation

20
Toronto a World Centre forRaising Equity
  • TSX and TSX Venture has 4,000 issuers with an
    average size of 1.3 billion on the senior market
    and 22.6 million on the junior market
  • 7th largest exchange group in the world by market
    cap
  • Strengths in natural resources and SMEs
  • Number one in both mining and oil and gas based
    on number of issuers
  • EXAMPLE 17 of 20 speakers at 8th Annual Metals
    and Mining Conference on June 4 in New York are
    listed on TSX

21
Toronto a World Centre forRaising Equity cont
  • TSX raised 59 billion in public equity capital
    in 2007 (7th in the world) with 19 billion for
    mining projects (12 billion on TSX and 7
    billion on Venture)
  • A record 49 new international listings were added
    in 2007
  • 219 new resource companies listed on the TSX
    Group in 2007

22
Toronto a World Centre forRaising Equity cont
  • More than a third of listed issuers (1,400) are
    mining companies
  • Twice as many as the next strongest mining
    exchange - ASX
  • Six times as many as AIM
  • AIM/LSE mining listings total 229 which is 17 of
    TSX Groups total

23
Canada Brings Expertise
  • In addition to its expertise in financing,
    exploration, construction, and mining Canada
    brings good corporate social responsibility (CSR)

24
CSR Success Stories in Africa
  • ITC Global
  • Banro - 800,000 in 2008
  • Anvil Mining - 6 million in DRC

25
ITC Global the Dikembe Mutombo Foundation
  • Foundation opened the Biamba Marie Mutombo
    Hospital in the DRC in Kinshasa
  • Telemedicine plays an integral role in the
    Hospital which does not have the proper capacity
    and bandwidth to support its full telemedicine
    program
  • ITC Global helped the DMF reach its goals by
    facilitating donations of under-utilized capacity
    for telemedicine programs at the hospital

26
Banro Foundation
A registered charity, funded by Banro and
operating in the DRC, with a mandate to support
education, health and infrastructure
improvements, principally in the communities
where Banro operates.
27
Health Infrastructure
  • New beds mattresses for the Namoya medical
    clinic, where major renovation is underway by
    Banro Foundation

New latrines for the Namoya medical clinic


28
Modern Kitchen Facility for Luwindja
Hospital
Existing Kitchen facility
29
New and Rehabilitated Bridges
30
Assessing the Challenges and Obstacles Faced
31
Transparency
  • Zimbabwe
  • DRC
  • South Africa
  • Botswana
  • Australian Publication Resource Stocks rated
    Botswana as having the 7th lowest country risk
    for mining globally (2007)
  • Transparency International rates Botswana as
    having one of the lowest corruption indexes in
    the world (37th out of 165 countries in 2006)

32
Risk and Security
  • South Africa - recent crime and headlines
  • Eritrea
  • Sudan
  • Kenya
  • Somalia

33
Competition from other jurisdictions for
exploration and investment dollars
  • South America closer geographically
  • Canada known environment
  • Russia huge and untapped

34
Changing Legislation
  • DRC
  • Zambia
  • But not unique to Africa -consider royalty Bill
    in Ontario for diamonds

35
The China Factor
  • benefactor or threat?

36
Election uncertainty
  • South Africa
  • Zimbabwe

37
Energy Crisis - Coal as a Needed Energy Source
World Primary Energy Consumption
World Electricity Generation
Source World Coal Institute, 2006 figures
38
US Recession
  • Likely to be offset by China and developing
    country growth
  • However, making the raising of money more
    difficult
  • Decreased exploration and capital expenditure
    budgets?

39
South Africas Challenge
  • International uncertainty over new presidents
    policy on foreign investment
  • Extreme crime highest in the world outside of
    Columbia
  • Energy crisis
  • Water crisis?
  • Skilled labour shortage and immigration
    difficulties
  • Beneficiation

40
South Africas Challengecontinued.
  • HIV/AIDs
  • Unemployment rate
  • Processing of mineral licenses
  • Public resolution of land claims
  • Lack of consistent promotion of opportunities and
    South Africa as an investment destination
  • Addressing of foreign investor concerns

41
The Impact
  • The greater the uncertainty the slower and harder
    it is to attract (risk)

42
Double Standards
  • What happens in Africa happens elsewhere yet it
    doesnt generate the same negative media coverage
  • Ontario diamond royalty bill
  • Mineral licensing in Northwestern Ontario
  • A well-known mining company in Canada took legal
    steps that resulted in the imprisonment of
    respected indigenous leaderships.
  • The Whitefish Lake First Nation is suing the
    federal and provincial governments for 550
    billion, claiming the producing mines humming in
    the Sudbury area are on native land.

43
What Other Potential Solutions
44
Transparency
  • Govts have to process licenses in a timely
    manner
  • Govts have to treat foreign investors in an
    equitable manner
  • Ministerial discretion

45
Defined Goals
  • Clearly defined projects and objectives for both
    govts and private sector

46
Better Promotion
  • mining investment does not just flow to a country
    it has to be courted.
  • Better and consistent promotion of projects and
    new mining legislation and competitive mining
    environment
  • you must have something to sell - at the very
    least a business plan, some geological
    information, proof of title and a clearly defined
    idea of want you want (money/jv partner)

47
Partnerships
  • Joint venture partnerships (taking advantage of
    Canadian expertise)
  • What type of partner
  • Financial
  • Operating

48
Dual Listings
  • According to a study in 2006 by University of
    Waterloo TSX listed companies that listed on AIM
    have experienced an increase in trading volumes
    on the TSX.
  • Listing on the TSX and the JSE

49
Case Study Anything is Possible
50
New Dawn Mining Corp.
  • Positioning to become a pre-eminent gold producer
  • Ian Saunders, CEO and President, is African born
    and raised
  • Where? Zimababwe!
  • Filed and received a receipt for its Final
    Prospectus with the Ontario Securities
    Commission.
  • Will being trading by mid-June 2008 on the TSX
    with the symbol "ND".

51
Why?
  • As a private company, sustainability and cash
    flow management led to a very streamlined and
    productive team. Accessing the capital markets
    allow a fast growth pattern then self funded
    development.

52
How it Came About
  • Having established a successful mining business
    in a challenging fiscal regime, the ability to
    export the business model to other regions was
    evaluated.
  • Identifying a under-developed smaller scale
    mining in South Africa, New Dawn has acquired one
    project (Blue Dot Mine) and is seeking others for
    further expansion.

53
How it Came About cont
  • The stronger governance of the TSX and some
    previous North American investors led to the
    decision to first seek a listing on the TSX.
  • The SADC is the region the New Dawn is focussed
    on and South Africa is still a land of great
    undeveloped mineral wealth.
  • Access to capital markets allows for greater
    flexibility to pursue these opportunities.

54
Useful Websites
  • Canada-South Africa Chamber of Business
  • www.canadasachamber.com
  • MineAfrica
  • www.mineafrica.com
  • Prospectors Developers Association of Canada
  • www.pdac.ca
  • Toronto Stock Exchange
  • www.tsx.com

55
Useful Websites cont
  • Natural Resources Canada
  • www.nrcan.gc.ca
  • Ontario Ministry of Northern Development Mines
  • www.mndm.gov.on.ca
  • Export Development Canada
  • www.edc.ca

56
Thanks
  • The following organizations contributed content
    to this presentation
  • Banro Corp.
  • Homeland Energy Corp.
  • ITC Global
  • New Dawn Mining Corp.
  • MAGIndustries Corp
  • MineAfrica
  • Natural Resources Canada
  • Sherritt International Corp.
  • TSX Group

57
For More Information
  • Bruce Shapiro
  • President
  • Canada-South Africa Chamber of Business
  • President, MineAfrica
  • Tel 416-588-7749
  • Email bruce_at_mineafrica.com
  • Web www.canadasachamber.com
  • Web www.mineafrica.com
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