Modern Mining Marchh 2017

feature MINING CONTRACTING The JSS Empowerment Mining Fund was introduced to the media in Johannesburg in late January. Seen here (from left) at the event are: Russell Crawford, MD of Stefanutti Stocks Roads, Pipelines & Mining Services BU; Gaurav Nair and Derrick Hyde, both directors of the Fund; and Ian Ferguson, MD of Stefanutti Stocks Mining Services (photo: Arthur Tassell).

As anyone involved in mining will know, there are many projects in the mining space that are large enough to involve relatively significant amounts of capex and yet are too small to attract traditional private equity funding. To cater for this niche in the market, Jaltech and Stefanutti Stocks have launched the JSS Empowerment Mining Fund. The fund’s target capital is R1 billion. New fund backs junior miners

T he Fund will operate in a unique niche, providing investment of be- tween R30 million and R200 mil- lion to qualifying South African junior miners. Importantly, the Fund will support qualifying South African junior miners both in respect of operational expertise and financial stability. Jaltech describes itself as an “African bou- tique corporate advisory firm focused on providing actuarial and corporate finance services to clients across the African conti- nent.” It has a long-standing relationship with Stefanutti Stocks, a well-established construc- tion, mining and processing company, which will provide contract mining and processing services as well as appropriate on-demand guarantees against mining production volumes and processing quality – vastly reducing the operating and financial risks usually associated with junior miners. “Junior miners globally often struggle to get affordable funding from financial institutions, particularly given recent depressed commodity prices. This is even more so in South Africa,” says Gaurav Nair, Director of the Fund. “This gap has been recognised by the South African government who have sought to address the

needs of small to medium business owners to grow their business and contribute positively towards the stimulation of the economy.” The Fund is one of just 43 entities in South Africa operating under the Section 12(J) of the Income Tax Act (Act 58 of 1962) for venture capitalist companies and will offer investors several benefits. These include returns in excess of CPI + 10 % per annum on the gross invest- ment amount (which, when the tax deduction is considered, can translate to considerably higher returns on the net investment) and a 100 % deduction from an investor’s taxable income in the year of investment. Also signifi- cant is that there is ongoing recognition of 70 % of the once-off spend towards the investor’s B-BBEE scorecard (in terms of the DTI Code) for every year the investment is held while the Fund is invested in qualifying investments. The Fund’s board and investment com- mittee brings to the table executive-level and governance experience in leading (and often listed) companies in various industries. Key players on the board include Chairman Mpho Makwana and directors Derrick Hyde, Mano Moodley, Gaurav Nair and Zukie Siyotula. Investment committee members have exper- tise in geology, mining engineering, mining

operations across the whole value chain, mining invest- ments and development, mining finance and audit- ing, mining contracting, and corporate and project finance. The investment committee is chaired by Zukie Siyotula and its mem- bers are Dr John Hancox, Vinay Somera, Derrick Hyde, Frik Venter and Nthabi Ledwaba. To mitigate the risks associated with junior min- ing ventures, the Fund will only consider projects which have a confirmed resource with a Competent Persons Report in place

40  MODERN MINING  March 2017