Objective Capital's Africa Resources Investment Congress 2011 Ironmongers' Hall, City of London 14-15 June 2011 Day 1: Africa Resources Speaker: Andre Van Zyl, Oak Ridge Mining Solutions

1. AFRICA RESOURCES
INVESTMENT CONGRESS
Artisanal gold mining
Andre Van Zyl – Oak Ridge Mining
IRONMONGERS’ HALL, CITY OF LONDON ● TUESDAY-WEDNESDAY, 14-15 JUN 2011
www.ObjectiveCapitalConferences.com

2. Artisanal Small scale Mining
Artisanal Small‐scale Mining 
as an alternative investment
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copyright and intellectual property of
Copyright and Intellectual Property Notice
Oakridge Mining Solutions Ltd –
O k id Mi i S l ti Ltd
© Oakridge Mining Solutions Ltd 2010.
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d b
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electronic retrieval system.
electronic retrieval system

3. Agenda
A d
 Introduction
 Some thoughts on the conflict in the eastern provinces
Some thoughts on the conflict in the eastern provinces
of DRC
 Introducing Fairmining and Kalminco
Introducing Fairmining and Kalminco
 Fairmining overview
 Kalminco
 Challenges and update
 The future of ASM Fairmining

4. Artisanal Small scale Mining
Artisanal Small‐scale Mining
as an alternative investment
Over 13 million people work directly in small mines throughout the world,
mainly in developing countries. The sector is known for its high
environmental costs, inefficiency and poor health and safety record. It is
also viewed as unprofitable and fundamentally unsustainable.
l i d fit bl df d t ll t i bl
Oak Ridge Mining Solutions has a different view
We believe ASM can play a crucial role not only in poverty alleviation and
rural economic development but also in regenerating local, regional and in
some cases national economies, while providing exciting new and
, p g g
alternative investment opportunities.
Today in the Congo 80% of all mining are still generated by artisans

5. Who are we…
Wh
Oakridge Mining Solutions Ltd (ORMS) was established as a social and
philanthropic enterprise to transform communities in the developing
world through enabling artisanal/small scale mining cooperatives to
world through enabling artisanal/small scale mining cooperatives to
mine more effectively, profitably, safely and responsibly.
These cooperatives are supported through joint ventures to in turn
p pp g j
generate sustainable economic transformation. ORMS provide
management expertise, assets, finance, business process,
communications/ IT infrastructure and international trade capability to
these commercial small scale mining companies.
Our main area of operation is the east of the Democratic Republic of
Congo.

6. Conflict in Eastern Congo…
C fli t i E t C
 Mineral trade in the DRC has been a central feature of conflict
in the Congo for decades,
 Resulting in the lowest per capita income in the world,
 A d
And one of the world longest running humanitarian disasters.
f th ld l t i h it i di t
 It’s a complex and multi faceted conflict, where superficial
and over simplified attempts at solutions tends to perpetuate
d i lifi d tt t t l ti t d t t t
rather than help the cause.

7. Our views on some of the issues...
O i f th i
 Blood in the Mobile movie – very subjective and one sided.
 DRC Government mineral ban – proof that the law of unintentional
consequences can sometimes have a very positive outcome!
ti h iti t !
 US Dodd Frank Bill – de facto embargo that could lead to economic
genocide. Not properly thought through with no alternatives or
solutions put in place. Impossible to comply with on the scale
solutions put in place Impossible to comply with on the scale
needed to ensure a positive outcome.
 Colonization vs Investment – what Africa needs is investment capital
‐ cash used to start businesses factories mines etc to create wealth
cash used to start businesses, factories, mines, etc to create wealth
 The real problem facing artisanal miners – debt, not militia

8. Congo conflict overview
C fli t i
Extract from article by Jason Stearns, previous head of the UN team of Special
Investigators into the East Congo Conflict
“…My article in Foreign Policy received several helpful comments from friends who
My article in Foreign Policy received several helpful comments from friends who
objected to the emphasis on conflict minerals by some advocacy groups in the
United States and elsewhere. There is a growing number of people ….who are
skeptical of this approach.
…. minerals were not the source of the conflict in the Congo, not will severing the
links between the mineral trade and armed groups bring an end to the violence.
The excessive focus on conflict minerals has the perverse side effect of believing
The excessive focus on conflict minerals has the perverse side‐effect of believing
that the war is driven by greedy warlords, can prompt irresponsible policy and lead
people to believe that the violence is somehow impossible to stop and due to deep
rooted antagonisms.”

9. Congo conflict overview
C fli t i
The conflict in the Congo is complex, and is being perpetuated by a mixture of
permissive, structural factors and active spoilers. The country lacks functional
institutions to police the country, secure equitable property rights and courts to
p y, q p p y g
peacefully adjudicate disputes. It has suffered from outside interference ……with a
mixture of motives. At the very local level, disputes over land and citizenship ‐
complicated by crises in civil and customary authority ‐ have fueled feuds and
conflicts, often expressed in ethnic terms.
conflicts often expressed in ethnic terms
Given all of this, the war in the Congo requires a much more comprehensive
strategy that looks toward the long‐term transformation of Congolese society to
become a less violent, more equitable place. In the end, this will be the
responsibility and concern of Congolese citizens, not foreigners.

10. The new face of mining
Developed in Africa for Africa
Oakridge Mining Solutions, in conjunction with local stakeholders in the DRC
have developed Fairmining, a sustainable new approach to poverty
alleviation and long‐term rural development by developing the artisanal
alleviation and long term rural development by developing the artisanal
mining sector into community owned small scale mining companies with a
dedicated social development and wealth creation objective.
An African developed, Congo led initiative
Fairmining ‐ The future of mining re‐defined

11. What is Fairmining….
Wh i F i i i
Fairmining promotes a sustainable
approach to poverty alleviation, long‐
term rural development and ultimate
wealth creation by providing a
framework for
‐ ethical trading,
‐ en ironmental a areness
environmental awareness,
‐ social development and
‐ regulatory compliance.
This standards based frameworks forms
the basis for the development of
p
practical and self sustaining artisanal
g
and small scale mining activities in
developing countries.

12. Community based mining
C it b d i i
 Fairmining assist communities and artisanal miners to form sustainable
community based cooperatives.
 Social development and ethically focused investors are introduced to
ld l d h ll f d d d
these cooperatives under Fairmining guidelines
 Local joint venture mining companies are formed where these
cooperatives retain a majority stake.
 These mining companies operate under the Fairmining model.
This will create a new generation of smaller, effective and environmentally
sensitive mining companies that will ensure wealth creation for the benefit of
local communities and regions while delivering high social and financial return
on investment for investors.

13. The future of community based mining
Th f f i b d i i
Profitable
commercial
small scale
Mechanisation
mining
of artisanal companies
mining activities owned by
Formation of under control of
community
community mining cooperatives
based mining cooperatives
b d i i
Ad Hoc cooperatives
artisanal
mining
activities

14. Fairmining Deliverables
F i i i D li bl
 Transparent business model that allows open
negotiation, builds trust across the stakeholders
and delivers returns at local, regional and
national level
national level
 Joint Venture structure that shares best practice
management
 Investment vehicle that attracts international
capital through high levels of return and
significant risk mitigation
 Supply chain rationalisation through an inclusive
approach
approach
 Best in class IT and Communication systems that
allow for end to end process management,
enhancing security and output authentication.
 Partnering with world standards organisations
such as Fair Trade and ITRI to assure end users in
their CSR requirements.

15. Fairmining Mineral Traceability
F i i i Mi l T bilit
We consider the ability to track mineral production
d h bl k l d
from source to export across the entire supply
chain as part of any business’s normal operational
processes and not as an add‐on or independent
processes and not as an “add on” or independent
activity.
All companies that adopts the Fairmining model
All companies that adopts the Fairmining model
will be required to adhere to this and implement
Fairmining traceability in conjunction with the
relevant regulatory or industry representative
g y y p
bodies.
The Fairmining traceability will help to establish a
transparent chain of custody.

16. Re‐defining mining
The Fairmining model introduce a number of important new
elements into the current approach to mining in predominantly
third world developing countries.
thi d ld d l i ti
1. A new approach to social development by incorporating
wealth creation as integral part of social development.
wealth creation as integral part of social development
2. A new approach to the acquisition of mining concessions
with the incorporation of community co ownership.
with the incorporation of community co‐ownership.
3. A new way to access development capital and investment
for small scale mining and artisanal mining cooperatives.
g g p

17. The first Fairmining
Th fi t F i i i company…
The first Congolese minerals company owned by the
The first Congolese minerals company owned by the
local community.

18. Generic Fairmining Business Model
Oakridge
COMIMPA
COMIMPA
Mining
Cooperative
Solutions
50%
20% 80%
Kalminco
Social
Development
Projects
40%* 35%*
70%*
Partner Partner
Partner
P
Company Company
Company
Eg. Eg.
Eg. Trader
Smelter Exploration
* = Percentages depending on business agreement

19. Kalminco’s h ll
K l i ’ challenges…
 The DRC Government mining ban was announced only days before
the launch of the first Kalminco pilot mining site, putting a hold on
all operations for 6 months.
all operations for 6 months
 Three weeks after the lifting of the DRC mining ban the US Dodd
Frank induce electronics industry embargo came into effect on 1
y g
April creating further delays.
 Raising the required investment capital.
 Building trust amongst members of communities.
 Debt – almost all artisanal miners are in debt to traders.

20. Kalminco update…
K l i d t
 Kalminco management played a leading role in the negotiations that
led to the lifting of the DRC mining ban and the adoption of a new
artisanal mining code of conduct.
g
 Kalminco VP elected as representative of all artisanal miners in North
Kivu, leading to the establishment of an umbrella cooperative
representing all artisanal miners in the province.
representing all artisanal miners in the province
 Kalminco have committed to implement the Fair Trade Gold standard
for small scale and artisanal mining, which together with Fairmining
traceability, will give a clear chain of custody that would comply with
traceability will give a clear chain of custody that would comply with
Dodd Frank and SEC requirements.
 Kalminco’s first Fairmining gold site have become operational this
month.

21. The future of artisanal Fairmining…
Th f t f ti l F i i i
 Since the end of the DRC Government ban a total of 36 cooperatives in South
and North Kivu have been formed based on the Fairmining model. They are now
in the process of registration before setting up joint venture structures.
 This conservatively represent around 800 000 miners.
 Mechanised small scale mining in DRC have the potential for exceptional high
yields, providing very attractive ROI to investors.
yields providing very attractive ROI to investors
 A high number of women mine owners are currently involved in these mining
cooperatives.
 Its not a silver bullet, it’s a slow and sometimes painful road, but it does provide
the local communities with a sustainable platform for economic and social
transformation.

22. The benefits of artisanal Fairmining
Th b fit f ti l F i i i
 We believe that the adoption of the Fairmining Model by local
artisanal mining will bring a number of important benefits :‐
 It will address the local community s economic and social aspirations,
It will address the local community’s economic and social aspirations
which in turn will create a more favorable climate for co‐existence
with large scale commercial mining.
 It will provide an alternative investment opportunity for the investor
demanding a higher social dividend than what is possible in traditional
demanding a higher social dividend than what is possible in traditional
commercial mining, while still delivering very attractive financial
returns.
 Community owned small scale mining companies like Kalminco offers
a new, sustainable and robust platform for international mining
exploration and other commercial partnerships with local
communities, mitigating one of the biggest risk in mining investment
in Africa today – local community conflict and political dependency.

23. Thank you…
Th k
We believe in the future
of Africa as a prime
of Africa as a prime
investment destination
and encourage you to
join the people of Africa
as they build a new
future of peace, stability
f t f t bilit
and prosperity.