Post on 14-Apr-2018
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
1/19
UGANDA&CHAMBER&OF&MINES&&PETROLEUM&MINERAL&WEALTH&CONFERENCE&
1
st
92
nd
&OCTOBER&2013&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
2/19
1&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
3/19
2&
East&African&Mining&Ltd,&carrying&out&exploraon&in&
Kaabong&district,&Karamoja&
&
!
A!look!at!the!industry!from!an!investment!
perspec6ve!and!the!prac6cal!challenges!facing!
explora6on!companies!in!Uganda!
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
4/19
3&
Uganda&has&much&opportunity&for&development&in&the&
minerals§or&
&&
Very&early&stage&for&the&industry&here&9&relavely&unknown&in&global&terms&&&
No&large&producers&in&Uganda&&yet&&&
We&believe&in&the&future&for&the&industry&in&Uganda&and&are&commiYed&to&spreading&the&word&about&this&
wonderful&country&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
5/19
4&
Understanding&the&environment&9&the&wider&economic&picture&
in&the&mining&industry&
&&
Mining&stocks&have&had&a&hard&me&
&& 2013&9&Market&capitalizaon&fell&for&37&of&the&top&40&
companies&losing&over&$200&billion,&or&17%&since&the&end&
of&2012.&(PWC)&
&&
Parcularly&tough&for&gold,&despite&high&prices& Margins&have&been&driven&down&&
Uncertainty&over&future&prices&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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Difficulty&in&raising&capital&for&early&stage&exploraon&
&&
Opportunity&cost&for&investors& Why&buy&early&stage&exploraon&when&you&can&buy&resource&or&even&producon&cheaply?& For&Uganda,&why&invest&here&when&you&can&invest&in&
Ghana&etc?&
Performance&of&share&price&in&Junior&Mining&companies&has&been&dreadful,&many&going&bust&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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What&worries&large&mining&companies?&
&&
Cost!& Labour&cost& Commodity&price&&decreasing&margins&&
Effecve&capital&deployment&&making&each&dollar&work&for&shareholders&
External&factors&&naonalizaon&etc.& Concentrang&on&efficiency&rather&than&expansion&&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
8/19
7&
What&makes&for&a&good&project?&What&would&you&invest&in?&
&&
Can&the&project&begin&to&generate&cashflow?&ou&cant&keep&going&back&to&investors&indefinitely&
Reduce&dependence&on&external&factors&such&as&markets,&investor&senment,&short&term&risk&&&&
Can&a&large&resource&be&defined?& Shillings&must&go&in&the&ground&&&
The&right&kind&of&resource:&high&grade,&cheap&to&extract& Larger&margins&create&safety&and&more&predictable&returns&&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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Developing&a&resource&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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&
Quality&of&work&
&&
All&technical&work&to&internaonal&standards&&NI&439101,&JORC&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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Developing&a&resource&
&&
Reaching&milestones&&linked&to&capital&requirements&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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Corporate&Social&Responsibility&
Important&to&address&social,&environmental&issues&&involve&the&community&
Companies&with&good&CSR&and&transparency&tend&to&aYract&investment&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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12&
Geng&to&producon&
How&long&will&that&take?& Typically&10&years&or&more&&no&income&for&company&
unl&that&point&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
14/19
13&
Why&do&early&stage&exploraon?&
&&
The&upside&
&
Potenal&for&a&good&return&on&investment&&&
The&downside&
&
Risky&&might¬&be&an&economic&resource,&ownership,&government,&local&partners&
Takes&a&long&me,&many&years& Expensive& No&exit&/&return&on&investment&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
15/19
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The&exit?&Who&is&buying&early&stage&projects?&
&&
Few&acquisions&are&being&made&at&the&moment&9&major&companies&have&cut&back&on&exploraon&and&acquisions&
Normally&exploraon&companies&develop&resources&to&a&certain&level&and&sell&to&majors&&this&cycle&is¤tly&
broken&
With&junior&companies&having&no&funding,&who&will&make&the&discoveries?&
Producon&needs&large&capital&investment&&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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Infrastructure&&helps&aYract&investors&for&the&next&stage&
&&
Power&&massive&part&of&the&cost&for&producon,&heavily&affects&margin&9&diesel&generators&much&more&
expensive&than&grid&power&
Transportaon:&Roads&&makes&exploraon&cheaper&and&quicker,&less&work&lost&in&rainy&season&
Railways&&route&to&market&for&bulk&commodies&
Human&resources&&well&trained,&movated&workers,&from&technical&to&manual&labour&
15&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
17/19
Expectaon&
&&
Expectaon&of&license&holders& The&value&of&the&project&
Expectaon&of&communies& Communicaon&and&educaon&
Expectaon&of&officials& It&takes&me&and&large&amounts&of&money&to&develop&a&
resource&&and&10&years&or&more&to&producon&
16&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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The&future&
&&
For&EAG&&moving&on&to&the&next&stage&in&a&project&that&we&
believe&in,&both&in&terms&of&its&technical&merit&and&the&
people&and®ion&
&&
For&the&Ugandan&mining&industry,&it&will&take&me&
&&
To&understand&the&parcular&requirements&in&the§or,&
especially&in&these&hard&mes&for&the&industry&
&&
7/27/2019 Challenges of Mineral Exploration and Investment in Uganda.pdf
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Look&at&things&from&the&investors&point&of&view&to&aYract&
good&investment&
&
Be&flexible&in&the&face&of&economic&uncertainty&
Transparent&processes&and&well&considered®ulaon& Paence&and&educaon&&take&the&long&view& AYract&the&right&kind&of&investor&
&&
Work&together&to&help&to&make&it&work&for&everyone,&the&
country,&the&company&and&the&community&
&&