Corporate Social Investment in a capital constrained world by Brandon Munro. www.kuneneresources.com

1. Corporate Social Investment
in a
capital constrained world
Brandon Munro
Managing Director, Kunene Resources Ltd
www.kuneneresources.com KNE.AX
Mines and Money Access Africa, 25 June 2014

2. Agenda
What is CSI (and what is it not)?
Justifiable CSI when funding limited
Identifying inappropriate CSI
expenditure
Project risks from ceasing CSI
Managing expectations
Greater results with lesser
expenditure

3. What is Corporate Social Investment?
Charity
CSI
Social licence
to operate
Investor prerogative
Company responsibility
Regulatory compliance
CSI is
not
like charity!
The right to operate pyramid

4. What is justifiable when funding is short?
CSI should target
risk mitigation…
…not charity
(and upside opportunities)

5. Key downside risks
De facto
regulations
Lobby
groups
Community
support
(opposition)
Regulatory
attention
Security &
accessibility
Human
resourcing
Licence
tenure
Corrupt
practices

6. What risk profile are you investing into?
Exploration Development Mining Services

7. What risk profile are you investing into?
Exploration Development Mining Services
Licence Tenure
Community support
Lobby groups
Security/access
Human resources
Corrupt practices
Regulatory compliance
Defacto regulations

8. What risk profile are you investing into?
Exploration Development Mining Services
Licence Tenure
Community support
Lobby groups
Security/access
Human resources
Corrupt practices
Regulatory compliance
Defacto regulations
Beware lead
times

9. Upside risk… financing alternatives

10. Upside risks… BD opportunities

11. Written plan/strategy?
How much and on what?
Project link with risk?
Assessment/decision making
process?
Community’s obligations?
Monitoring/evaluation?
Link with external relations?
Key CSI questions to ask?
CSR Charter
Implementation guidelines
(pre-production)
Operations
• Profitability
• Capex
• licence to operate
• regulatory
compliance
• Management
Environment
• Natural
• Social
Community
• Engagement
• Development
Workplace
• Attraction
• Respect
• Development
• Retention
• AAP
• Ownership
Health and Safety
In place HR Policies
Policies and Guidelines
and
Procedures
Community
Development
Program
IFC ESIA
process

12. Red flags
No expenditure
Scattered donations
Political/religious donations
Emotive donations
Inappropriate/corrupt support
Political intervention
No accounting records
No champion

13. Ceasing or reducing CSI has its own risk
• Use risk-management as the basis for spending
cuts. Cut by effectiveness not quantum
• Understand who are the beneficiaries… and
benefactors (beware political revenge)
• Don’t risk your social licence to operate
• Any mitigations or bridging plans?
•
CSI
Social
licence to
operate
Regulatory compliance
• Consider risks to company’s reputation, perceived ability to execute
• Avoid shutting down projects prematurely – sends stronger message
than not renewing
• Manage through interface with external relations/PCDP

14. Impact of CSI on community expectations
Measure Mitigate
Expectations
Assess (guess)
hopes, dreams
...or demands
Be modest,
under-promise,
respect local
balance
Meet (?) Manage
Communicate,
recalibrate and
extricate
Anticipate flow-on
effects, avoid upward
spirals

15. Two way contracts with communities
• Stage expenditure
with obligations on
recipients/community
• Ensure community
accountable

16. Greater results for less
• Use procurement to create CSI
benefits
• Focus on capacity building
• Leverage other
funding sources
• Have time limits
• Focus resources on
flagship project(s)

17. Questions?
Email me at: Brandon@BrandonMunro.com
www.kuneneresources.com
KNE.AX