Andy Clay, Managing Director and Godknows Njowa, Executive Lead, Venmyn Deloitte

Andy Clay and Godknows Njowa talk about the operations of Venmyn Deloitte.

Venmyn Deloitte was established in November 2012, when Deloitte purchased 25-year-old mineral advisory firm Venmyn and incorporated it into Deloitte South Africa’s Mineral Advisory Services practice. Can you elaborate on the company’s role in the African mining industry?

AC: The purpose of Venmyn’s merge with Deloitte is twofold. Firstly, through Deloitte we now have a base in almost every country and are truly global. Secondly, we have access to a vast selection of specialized skills that we can call upon as Deloitte has 250,000 employees worldwide and can do business practically anywhere, mainly for the securities exchanges and transaction orientated projects. We specialize financial valuation, technical evaluation and projects requiring technical expertise. Venmyn Deloitte helps companies to understand the value of their assets relative to the market price. Companies have to value their assets relative to impairment calculations and Venmyn Deloitte helps them do that within the context of IFRS standards and the mineral asset valuation codes. A mineral asset is much more than the ore in the ground. It is also the ability to license and to mine it and the ability to raise finance. The accounting definition of an asset is a resource that is in control of an enterprise and from which future economic benefits will flow. The problem is that by the legal interpretation of control and the accounting interpretation means 51%. Godknows and myself also sit on the new International Minerals Valuation Committee that is coordinating a new common mineral asset valuation template.

Mark Learmonth, Vice President Business Development, Caledonia

Mark Learmonth discusses the challenges of operating in Zimbabwe.

Can you provide a brief overview of Caledonia and the evolution of its operations in Africa?

ML: Caledonia is a Canadian company whose main interest is a 49% share in the Blanket gold mine in Zimbabwe. Becoming fully indigenized in late 2012 has afforded us tremendous growth opportunities. Blanket gold mine produced a record of just over 45,000 oz in 2012 and has very low cash cost of $570 per oz in 2012, down from $590 from the previous year. In January of 2013 we announced Blanket mine’s growth strategy to increase production by 90% to 76,000 oz by 2016. Blanket will be investing $37 million that will be internally generated at the mine over the next five years. Caledonia paid its first dividend in February of 2013 and has just announced a further dividend in respect of profits generated in 2012. We are one of a very small number of gold mining companies that will be growing aggressively over the next few years whilst paying a dividend. We have surplus capacity and we can increase production substantially without having to invest heavily in the metallurgical plant. Further north, Caledonia also has a base metals exploration project that focuses mainly on copper in the North West province of Zambia.

Ralf Hennecke, General Manager: International Marketing, BME

Ralf Hennecke discusses BME’s long history in Zimbabwe.

In our last report in 2011 South Africa accounted for 75% of BME’s business in Africa and there were plans to expand its operations in Africa. Can you tell us how these plans have progressed since then?

RH: In Southern Africa BME now has a large portion of the market share on surface mining and on the entire continent outside of South Africa, our market share has risen considerably over the last year. This is evident in that Africa is now on par with South Africa in terms of turnover, which is a significant change over the last two years. This can be attributed to phenomenal growth in Africa rather than a contraction in the South African market, as this has in fact been steadily growing. In the last 12 months BME’s volumes grew by 92% in the rest of Africa. Differentiating between surface and underground mining in South Africa, BME has a small market share of the underground market, while we are predominantly strong in surface mining. In Africa, BME is equally strong in both and may even be a stronger supplier for underground mining from a volume perspective. Zimbabwe, Zambia and Ghana have more underground mining than their African counterparts and in both Zimbabwe and Zambia, BME has the largest underground market share. There seems to be a trend in Africa for many surface mines to change to underground when they get too deep.

Mr. Prince Mupazviriho: Permanent Secretary, Ministry of Mines and Mining Development

Zimbabwe is one of the richest countries on earth with respect to untapped mineral wealth and natural resources per person. Today the mining industry countributes only 15% to the nations GDP, however givien the mineral endowment, there is room for growth. What steps is the Ministry taking to perpeturate long-term sustainable growth in one of Zimbabwe’s mainstay industries?

PM: The Ministry of Mines and Mining development superintend the development of the mining sector in Zimbabwe. The Ministry is the administrator of the mining laws and regulations and we can provide any potential investor with the information they need to invest in the mining industry.

Neels van Eijk, CEO / Chief Pilot and Mark Loretz, Sales and Marketing Manager: Whirlwind Aviation Tanzania Limited (“Whirlwind Aviation”)

Whirlwind Aviation provides the only readily available commercial helicopter service in Tanzania: can we start with a brief history of the company here?

Whirlwind Aviation’s main purpose here is aero medical. Tanzania is enormous and lacking in infrastructure, many people die unnecessarily as rescue services in the country struggle to cover the distances between places. Whirlwind Aviation is qualified to do mountain and aquatic rescue, but is also involved within the construction and engineering industry and undertakes geological surveys for mining companies. Our service is new to the country: penetrating the market is therefore a cumbersome process but we are doing well and are starting to enter the tourism industry, which offers several opportunities. Sometimes we also fly VIP’s: We fly the president of Tanzania, the Royal family of Oman, Qatar, UAE and several celebrities.

Samuel K. Gyan (Kiki): African Assay Laboratories (Tanzania) Ltd (“SGS”)

What is the history of SGS in Tanzania?

SKG: SGS was incorporated in Tanzania 50 years ago. It is the leading inspection, verification, testing and certification company in Tanzania with more than 300 permanent employees operating in Dar Es Salaam, Tanga, Mtwara, Mwanza, and the Mine-sites spread throughout the Lake-Zone area, and any other location where need arises.

Terry Nelidov: Manager, Advisory Services – BSR Hong Kong

Could you provide a brief overview of BSR: its history and current operations?

TN: BSR is a unique organization. We are a global business network with 300 companies, covering a broad range of corporate-sustainability issues. Our membership includes some of the largest mining companies, such as Rio Tinto, Anglo Gold Ashanti, Newmont, and Kinross. An important differentiating point is that BSR is a non-profit organization, not a company. This changes everything. Our mission is “to work with business to create a just and sustainable world”. We pull together a lot of different issues – like stakeholder engagement, strategic community development, human rights and governance – into one integrated approach that we call “local sustainable performance”. For us it is important because, while mining is a global business, it has local impacts and opportunities. It is really important to talk about local benefits to the community and sustainability, not just from an economic point of view but also from social, political and governance perspectives.

Bill Page: Partner, Deloitte Tanzania

Can you provide a brief overview of your services in the Rovuma Basin?

BP: To call Deloitte an accounting firm is to grossly oversimplify what we do. In East and Southern Africa Deloitte offers its full range of tax advisory and auditing services, but also, amongst other things: accounting outsourcing, a very strong consulting arm and a large financial advisory practice, providing corporate finance valuations, assistance with financing and forensics and internal control advice. In East Africa we have a very strong focus on the upstream oil and gas industry. Unless you have worked on relevant projects before, it is really difficult to get to grips with this sector, and I believe that Deloitte has significantly more expertise than the rest of the Big Four in the region. Our client list shows this: we are working with most of the large investors across the East Africa.

Dr. Joe Oteng-Adjei: Minister of Energy, Ghana

What measures have been taken to ensure that Ghana will become a major exporter of oil and power by 2012 and 2015? What action still needs to be taken to achieve this target?

Dr J O-A: Energy is critical for the development of the Ghanaian economy, although a recent study that was carried out by the government highlighted that access to credit and energy are two key constraints to future economic growth. Ghana experienced a major power crisis in 2006-2007, which ultimately reduced Ghana’s GDP by 1%. It is vital for Ghana to have an internally robust system. The Ministry of Energy will introduce a business-focused policy for the export of electricity to neighboring African countries. The Ministry of Energy has created structured IPP and PPP models to encourage the private sector to invest in Ghana. The government has created an attractive investment environment for independent power producers, and provides assistance to companies by taking an equity stake, which enables the private sector to remain the operator. The transmission sector is wholly owned by the government to enable open access to all generation companies. Ghana has begun distributing power in communities close to the country’s borders, which enables the development of communities outside of Ghana. The Ministry of Energy’s two main objectives are to create revenue through the export of oil and power and to support regional economical growth and development.

Mr. Edward Nana Yaw Koranteng: Head of Energy, Oil & Gas and Mining – Fidelity Bank Limited, Ghana

Fidelity Bank is currently the sixth largest bank in Ghana and has the aim of being the largest by 2020. How important is the oil and gas sector to your ambitious plans for growth?

ENYK: The oil and gas sector in Ghana is of great importance to the Bank due to the cascade effect it is going to have on the entire economy. With the flow of crude and utilization of associated gas, the economy is due to expand tremendously. This will be seen in the supply of vessels to pipelines, construction of storage tanks, refineries, power stations, transmission grids, public utilities, airports, construction and real estate, manufacturing and hospitality services. With an estimated contribution of GDP being in excess of 40%, this sector shall also bring about lifestyle changes seen in expansion of the middle and upper income class and a corresponding increase in consumerism and spending patterns which shall also provides immeasurable opportunities to the Consumer and Retail division of the Bank.