Where’s the money? Funding for juniors. Discussion document for the Joburg Junior Indaba

1. Where’s the money? Funding for juniors.
Junior Indaba
Johannesburg 4th – 5th June 2019
Junior Indaba June 2019

2. 2
Global exploration spend on the rise
⧫ Global exploration
activity strengthening on
the back of rising bulk
commodity prices
⧫ Global budgets expected
to increase by 5-10% in
2019
⧫ Gold accounted for half
of global exploration
budgets in 2018
⧫ SA exploration budgets
have steadily declined
over the past 10 years
⧫ Why isn’t Southern Africa
attracting a larger share
of exploration budgets?
Sources: S&P Global; Stockhead
Junior Indaba June 2019
Global exploration budgets are still below 2014 levels

3. Investors deterred by perceived risk
3
Southern Africa is becoming more attractive, however perceptions of hostile
investment environments still deter investors
Investment Attractiveness Index (Fraser Institute, 2018): a composite of mineral
investment and policy perception factors.
⧫ Botswana is the highest
ranked African country
⧫ SA and Zimbabwe’s policy
rankings have improved
significantly in the last year
⧫ Unclear legislation is a
concern for investors
⧫ DRC and Zimbabwe policy
perceptions rank in the
bottom 10 globally
⧫ Africa ranks as the second
least attractive region for
investment globally
Junior Indaba June 2019

4. 4
Stakeholders’ expectations
Revenue
Job creation
Beneficiation
Sustainable
development
Political stability
Good governance
Security of investment
Diamond prospectivity
Track record of economic
production
Security of tenure
Tax incentives
Enabling
regulatory
environment
Economic
growth
Credit rating
Social licence
to operate
Investors
Explorers
Governments
Commercial
return
Junior Indaba June 2019

5. Value creation and risk
5Junior Indaba June 2019

6. Southern Africa’s competitiveness
6
STRENGTHS
♦ Highly prospective diamond region
♦ Track record of commercial
production
♦ Evolved regulatory environment with
strong judiciaries
♦ Mostly growing economies
♦ Improved mining attractiveness
rankings
WEAKNESSES
♦ Capital constrained explorers
♦ Local HNWI* not investing in local
exploration
♦ Insignificant local listings of junior
explorers
♦ Governments’ exploration databases
♦ Licence application processes
OPPORTUNITIES
♦ Developed financial markets
♦ Juniors driving greenfields exploration
♦ HNWI*: over 40,000 in SA; over 3,000
in Botswana
♦ SA’s 12J (or equivalent) as potential
flow-through schemes
♦ Crowdfunding for exploration
THREATS
♦ Onerous regulatory requirements
♦ Uncertainty and complexity of mining
policy
♦ Investors’ perceptions of resource
nationalism
♦ Governments’ royalties and free carry
expectations
*HNWI = high net worth individuals with total wealth >$1M
Junior Indaba June 2019

7. Discussion
7Junior Indaba June 2019