Reflections on Mining Indaba and the status of mining investment

11 February 2019

Guest column from Drew Craig.

The attraction for hosting an international mining event in Cape Town is obvious with the impressive scenery, the fine weather and the quality of food and wine. Now in its 25th year, the Investment INDABA is under new management and continues to attract a broad spectrum of investors, explorers, developers, miners and service providers. Vital of course is the additional extensive government representation, including several states from outside of Africa, notably the Kingdom of Saudi Arabia.

Many long-term participants of the INDABA have commented on how the balance of service providers and suppliers has steadily increased over recent years, frustratingly to the detriment of representation for junior explorers, developers and producers. This year however saw a concerted effort to redress that balance with an exclusive and limited access investment zone and presentation events such as the ‘Investment Battlefield’.

The INDABA of course is now not the only show in town and 121 Mining continues to offer a tailored solution for investors seeking time efficient access to opportunities. Hosted in the shadow of Table Mountain at the Welgemeend estate the 121 Mining format has gained in popularity since its inception in 2015 and this year hosted over 115 investment opportunities, many of whom secured back to back meetings for the two days with over 450 investors. Pablo Martin, 121 Founding Partner, was delighted with another successful edition, noting, “121 Cape Town continues to go from strength to strength.”

In general, the natural resources market continues to recover after a prolonged period of uncertainty. Geopolitical risk is certainly to the fore of many investors’ minds but perhaps that’s ironically closer to home in the UK and US rather than in the exploration fields of deepest Africa! The demand for precious metals continues unabated and growth, albeit reduced, in several markets, most notably China, continues to drive appetite for copper, zinc and other base metals. With dwindling reserves across major production centres there appears to be determined drive to secure funding for exploration and development and we’re seeing an increase in M&A as well as strategic investments by Majors. This evolving shift is reflected in the increase in drill capacity and in other service sectors. William Ward, Capital Drilling’s Exploration Operation Manager commented, “Production capacity remains stable, but we’ve seen a steady increase in rig commitment in West Africa for exploration and development”. We’re also seeing consultancy services increasing, not just at the corporate level, but also at the strategic level as governments recognise the need to evolve, improve the attractiveness of their mining laws and regulations and leverage the often-large volumes of data that already exist. Having been involved with several such programmes, SRK Exploration’s Managing Director James Gilbertson noted, “Nations in competition for investment are recognising the requirement for legal and fiscal stability, the provision of access to geodata and ensuring that licencing systems are transparent.“

On the investor front, there remains a menu of opportunities to suit all capital palates. The challenge, however, is in deploying that capital to those opportunities in a quick and efficient manner. The traditional broker route remains the go-to for many but is costly and restricts exposure to the overall investor base when opportunities are active. One company seeking to provide intelligent access to focused capital is MINEXIA. MINEXIA has developed an online platform that provides pre-approved sophisticated investors with free access to mining investment opportunities in an efficient and transparent process. Commenting on their NR Private Market platform, Investment Director David Bellingham proposes that, “now is the time to offer an innovative, alternative and more efficient route to financing for early-stage explorers and developers“.

So, it’s not quite business as usual; there’s cautious optimism and there appears to be genuine enthusiasm for the opportunities that 2019 offers.

Drew Craig, MD and Principal Geologist at Rocklore Exploration Services and Technical Director at MINEXIA. Connect with Drew on LinkedIn.

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MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR