Strategies for achieving "Bankability" for mining projects in Francophone West Africa MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto Stéphane Brabant, Partner, Herbert Smith Paris LLP 8 March 2011

A “Bankable” Project is to be… 

Profitable but for all stakeholders shareholders, States and population)



Legal but also “licit” (e.g. EP and Soft Law)

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Secured (Investors and And for the life of the project

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Africa 

High potential/reward (mining and infrastructure), sovereign rights, mining occupies a large part of the economy

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Diverse (languages, systems of law, cultures) with some similarities

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Stability (change of government, of law, “revisitation”) To make a project “bankable” with knowledge and respect of the context

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Mitigation of Risks, some key issues 

Security of tenures, chain of title, secure of all rights in relation to the full project (exploration, exploitation, land occupancy, infrastructure – law, decree, letters)

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Well balanced contract (and law), notion of economic equilibrium:

•

investors (profitability – tax)

• •

state (tax, participation) population (local communities)

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Human rights and Soft law (EP, extractive industry)

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Key provisions, key protection 

BITs (including for banks)

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Supranational laws (OHADA, CEMAC, UEMOA, etc)

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Stability provisions

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Crisis management and dispute resolution

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Security over the project/assets/accounts (civil law issues with common law financing – notion of public interest)

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Direct agreement and step in rights

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A continent of cultural and legal diversity

Like the rest of the world, Africa is a continent of diversity...

Francophone countries Spanish and Portuguese speaking countries English speaking countries Arabic / French speaking countries Arabic / English speaking countries

…with different influences and languages A world where 6,000 languages are STILL spoken meanings – a number of them in Africa – but one international business language, the terms of which can have different

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An Overview of African Legal Systems

NATIONAL LEGAL SYSTEMS Common law and civil law traditions Two legal systems in Africa

(sometimes complemented by Islamic law or customary law)

Systems based on civil law principles

French legal system (Napoleonic Code) Portuguese, Spanish and Italian legal systems (largely based on Roman law)

Systems based on common law principles Mixed civil law / common law based systems

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What does a lawyer see when he looks at a natural resource project?

Necessity for legal clarity where there is factual complexity DIVIDENDS HOST STATE

JUDICIARY PRIVATE COURTS ADMINIS TRATIVE COURTS LEGISLATIVE EXECUTIVE $ LOAN ECAs BANKS HEDGE AGREEMENT HOST STATE’S LEGAL SYSTEM HEDGE PROVIDER $ PRIVATE LAW ADMINISTRATIVE LAW BANK ACCOUNT $ $ BANK ACCOUNT EXPLOITATION PERMITS MINING/OIL AGREEMENTS EXPLORATION PERMITS

MINING COMPANY

DIVIDENDS INTERNATIONAL MINING/OIL COMPANY $

DEPOSIT HOST COUNTRY

SALE OFFTAKER EPC WARRANTIES

OFFSHORE

(SUB) CONTRACTOR 10 $ 5155799_1