Modern Mining June 2023

JUNIOR MINING

Junior miners in the gold sector contributed R6.3 billion in revenue.

exploration fund mooted by the IDC, needs to take place, he says. “The Junior and Emerging Miner’s Desk is eagerly awaiting escalation of developments related to the exploration fund – a R500 million fund to be set up by the IDC to underpin much-needed exploration in South Africa. We have been talking about this fund for the past few years and there is certainly a sense of urgency to get the fund up and running as soon as possible.” On a positive note, though, a few junior miners have been able to access funding to fast-track proj ect development. Funding can be entirely offshore, examples being Southern Palladium and Theta Gold, or it can be hybrid such as Orion Minerals which has a dual listing in both South Africa and Australia, or funding for mainly smaller projects can be entirely local as in many of the quarry operators who are members of ASPASA. JEMD initiatives to grow the sector The Junior Mining Incubator programme, initiated in 2022 in conjunction with the JSE, is tasked with mentoring emerging miners by exposing them to capital markets, providing them with necessary training, advice from industry experts and a platform to present their company to key industry players. It is proving to be extremely useful as evidenced by the response from the latest intakes - Lethabo Exploration and M Exploration. “The incubator programme is offered to emerg ing and junior mining companies when they join the Minerals Council. In fact, Lethabo Exploration and M Exploration are currently participating in the incubator programme – which has had an extremely positive impact on their business development,” says Mitchell. The JEMD is also supporting a review of the Artisanal and Small-Scale Mining Framework (ASM), a policy document released by the DMRE earlier this year. “It is essential that the Minerals Council has input into the ASM policy framework, which will might later be promulgated into legislation. The policy docu ment has significant implications for how to manage and formalise artisanal and small-scale mining. We

market, with the junior mining sector particularly hard hit by these challenges. “While mining majors operating across global jurisdictions have access to international capital markets, junior miners remain largely hamstrung. However, some of our junior miners are dual listed, which means that they have access to international capital markets, but a large portion of junior produc ers are local entities that struggle to access project funding, which means that their growth and develop ment has been stymied,” says Mitchell. Moreover, policy related challenges and exces sive red-tape continue to scare-off investors, “who by their very nature are extremely skittish, preferring to stay away from high-risk areas”. “Investors are extremely sensitive and jurisdic tions with unfriendly policies, such as South Africa, with its litany of problems especially those related to social instability and community uprisings against mines, have seen investors back away even if the intended projects are lucrative and entail commodi ties that are in demand,” he explains. To overcome the challenges associated with power, junior miners are forced to invest in renew able energy projects and foot the bill for transporting commodities via road, which comes at a significant cost. “Transnet’s inefficiencies have compelled junior miners to find alternative routes to get their sea borne product to the export market. In a bid to help the mining sector, the Minerals Council is working closely with Eskom and Transnet to find solutions to issues related to power and logistics. Moreover, with the MPRDA coming up for review, industry and government will need to work closely to ensure the final document is business-friendly and encourages foreign direct investment into South Africa,” says Mitchell. Further to this, action related to the long-promised

A few junior miners have been able to access funding to fast track project development.

22  MODERN MINING  June 2023