Transcript www.mineafrica.com

Revamping Africa's Mining Laws:
A Canadian Assessment
Presented by:
Janne Duncan
Partner (Toronto office)
416 202-6715
[email protected]
Calgary  Toronto  Moscow  Almaty/Atyrau  Caracas  Rio de Janeiro
Major Mining Investment Destinations - 2009
Democratic
Republic of Congo
Burkina Faso
Tanzania
Ghana
Angola
Zambia
Botswana
South Africa
Securing international investment
Five things Governments in Africa should do to ensure
the security of investment from international mining
companies:
1.
2.
3.
4.
5.
Maintain high standards of transparency and accountability
Communicate stability
Make statements carefully
Have clear enforcement
Understand the ramifications of NI 43-101
1. Transparency and accountability
The host government should send a clear signal to
investors about the following:
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Scope
Role of government
Legislation framework
Licencing and permits
Registration system
Third party rights
Governmental payments
2. Stability
• The host government needs to communicate that its
mining regime will not be subject to radical change.
• Certainty and stability are critical, allowing
companies to make forecasts and projections
(including to investors), create operating budgets
and obtain financing.
• Expropriation or nationalization of mineral properties
is a very high risk feature.
2. Stability
Investment risk
Foreign investments and operations
Mining Company conducts mining, development and exploration activities in
many countries, including ….
Mining investments are subject to the risks normally associated with conducting
business in a foreign country, including:
• changes in laws or policies of particular countries, including laws
relating to imports, exports, duties and currency
• cancellation or renegotiation of contracts
• royalty and tax increases or other claims by government entities,
including retroactive claims.
These risks may limit or disrupt operating mines or projects, restrict the
movement of money, require more spending than previously expected, result in
cancelled contracts or property taken without fair compensation because of
nationalization or expropriation.
3. Statements
• Government officials need to be careful about
comments they make to the press.
• A comment can trigger a disclosure obligation for
the mining company, can panic investors and create
market volatility.
• Eg: Crystallex
3. Statements
“Crystallex comments on market activity and Las Cristinas
Crystallex International Corporation…. reported today that it is aware of certain
comments related to the Las Cristinas gold project attributed to President Chavez
in Venezuela.
Outside of the media coverage, the Company has not been notified of any
changes in position by the Venezuelan Government regarding the Las Cristinas
Project or the Mine Operating Contract (“MOC”).
Crystallex staff and representatives are in continual communication with Senior
Venezuelan Officials and the comments attributed to President Chavez regarding
Las Cristinas have not been raised with the Company.”
4. Clear Enforcement
The legal aspects of a mining investment are crucial
for project financing.
• Some countries have inadequate protections in areas like
contracts, business organization and bankruptcy.
• Litigation sometimes results in conflicting legal systems, law
issues, and courts claiming to have jurisdiction.
• Two instruments are used in commercial arbitration:
– New York Convention (some states have not signed)
– Model Law on International Commercial Arbitration.
• Multilateral agencies can also help avert claims and resolve
disputes.
5. National Instrument 43-101
• The global standard for mining disclosure.
• Relevant to all companies in the mining industry
who are or wish to go public.
• Based on best practices for the mining industry
generated by the Canadian Institute of Mining
Metallurgy and Petroleum.
• Technical reports must be in the format defined by
NI 43-101, and must be filed on SEDAR.
Why Canada?
• Canada is the resource leader in mining, and oil
and gas.
• TSX dominates the international mining industry
and is home to leading global mining companies.
• Excellence in mining professionals: accounting,
legal, analysts, engineering, investment banking.
Macleod Dixon’s Offices
Calgary,
Toronto
Moscow
Caracas
Almaty,
Atyrau
Rio de
Janeiro