The Role of SAMDA in Junior Mining in South Africa

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The Role of SAMDA in Junior Mining in South Africa

• 09 September 2008
• Clyde Johnson Chairperson, SOUTH AFRICAN MINING
  DEVELOPMENT ASSOCIATION

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History of SAMDA

• Started by a group of like minded individuals in
  2000
• To make input into the then draft Mineral and
  Petroleum Resources Development Bill
• Followed on from Bakabung Initiative in 1999
• Research conducted by the MEPC indicated a need
  for a strong body representing the interests of
  the junior and BEE sectors
• Formally launched as an organization in 2002

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Who is SAMDA?
Distinguishing between the players
The Chamber of Mines
Junior Mining Chamber

• Companies that have asset base R30mil to
  R1bil
• turnover R18mil to R1bil

Small Scale Mining
Artisanal Mining
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Defining Junior Mining

• Companies with an asset base of between R18
  million and R1 billion
• Annual Sales turnover of between R30 million and
  R1 billion
• Comprises of smaller producers, exploration
  companies and contracting companies

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Structure of SAMDA

• Registered as a section 21 company in 2002 with a
  constitution
• Board of Directors comprising of a President,
  Chair, Vice Chair and Directors
• A permanent office and staffing providing
  administrative and secretarial functions
• Legal, account, policy, research, media and Web
  services outsourced but under the control of the
  Board.

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Structure of SAMDA
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Membership of SAMDA

• The key organization representing the Junior and
  BEE sectors in mining
• A number of companies above the financial
  threshold that support the objectives of SAMDA
  join by special approval of the board
• Represents the interests of some small scale
  miners

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The Work of SAMDA

• To achieve an enabling environment for Junior
  mining by
• Lobbying government, organised labour and other
  institutions in key policy areas
• Developing technical and other skills
• Encouraging local and international investments
• Conducting research
• Building African and global alliances

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Research Model in Developing Policy options

• All policy documents are developed by researchers
  in consultation with SAMDA members
• Task teams are appointed to develop the document
  and take the process forward with government
• SAMDA is fortunate in having a network of subject
  experts in the fields of finance, mining, law,
  tax, BEE and charter compliance issues,
  engineering and skills development

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Key Policy engagements of SAMDA to date

• Made representations on the draft Royalty Bill
  and had several meetings with Treasury
• Met with the Commissioner of SARS to discuss
  mining tax related issues
• Held a workshop on Mining right Conversion issues
  with the DME Produced a position paper on
  identified problem areas
• Held a workshop on BEE and Charter compliance
  issues with the DME Produced a position paper
  for government

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COMMUNITY PARTICIPATION

• SAMDA supports community participation in all
  aspects of a mining venture and is supportive of
  the Minister insisting on their presence on the
  Ministerial Advisory Board.
• Supports the Principle of an Impacts and
  Benefits Agreement
• We would appeal to all stakeholders to re-instate
  the Coal Sector Task Team to continue addressing
  entitlement challenges.

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Policy engagement - continued
(still to be constructed)
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• CHARTER REVIEW
• We are concerned about the potential
  non-compliance by stakeholders through
• fronting.
• SAMDA is currently preparing its charter
  review for October 2009
• Overlooking section 11 is a crime
• The buying and selling of mining permits and
  prospecting rights is being
• compromised
• Economic sabotage Genuine junior producers are
  disadvantaged
• when unscrupulous investors hawk mining
  assests
• to the highest bidder,
• and the income in non mining and non
  job-creating deals.
• Legal agreements (eg shareholders agreements
  funding agreements management contracts etc)
• BEE investors are seriously constrained by
  lock-up clauses in shareholders agreements
• BEE investors are not able to participate as
  equal partners due to one-sided contracts
• Minority protection for BEE investors is non
  existent in many legal agreements
• Lack of funding exposes BEE investors to
  dilution of shares.
• High interest rates and expensive funding from
  financial institutions threatens the funding
  abilities of BEE investors

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• RURAL COMMUNITIES
• SAMDA is happy that rural communities are now
  represented on the
• Ministerial Advisory Board.
• We trust that the rural communities
  challenges will be effectively
• addressed by the Board.

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• RURAL COMMUNITIES
• SAMDA is happy that rural communities are now
  represented on the
• Ministerial Advisory Board.
• We trust that the rural communities
  challenges will be effectively
• addressed by the Board.

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• RESOURCES BANK AND COLLATERAL FUND
• Mining industry in great need of a Resources
  Bank
• Royalty payments can contribute towards
  funding the Resources Bank
• Collateral fund to address fund challenges
• Absence of collateral by BEE investors creates
  funding headaches
• Royalty payments can also contribute to
  creation of the collateral
• fund.

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Conferences and Networking

• SAMDA hosted an international conference in 2005
  on global mining issues. Delegates and speakers
  were drawn from across the world.
• The conference focused on
• Sustainable development in mining,
• Skills development,
• Mining conflict areas,
• Tax and financial issues
• Building global alliances through mining

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Future Direction

• To Continue being the vehicle for the development
  of a vibrant and sustainable junior mining sector
  which contibutes towards the growth and
  prosperity of the SA Inc
• To encourage global best practises
• To continue a healthy dialogue with all
  stakeholders