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Strategies for achieving "Bankability" for mining projects in Francophone West Africa. MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto. Stéphane Brabant, Partner, Herbert Smith Paris LLP 8 March 2011. A “Bankable” Project is to be….

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Strategies for achieving "Bankability" for mining projects in Francophone West Africa

MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto

Stéphane Brabant, Partner, Herbert Smith Paris LLP

8 March 2011

a bankable project is to be
A “Bankable” Project is to be…
  • Profitable but for all stakeholders (Investors and shareholders, States and population)
  • Legal but also “licit” (e.g. EP and Soft Law)
  • Secured

And for the life of the project

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africa
Africa
    • High potential/reward (mining and infrastructure), sovereign rights, mining occupies a large part of the economy
    • Diverse (languages, systems of law, cultures) with some similarities
    • Stability (change of government, of law, “revisitation”)
  • To make a project “bankable” with knowledge and respect of the context

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mitigation of risks some key issues
Mitigation of Risks, some key issues
  • Security of tenures, chain of title, secure of all rights in relation to the full project (exploration, exploitation, land occupancy, infrastructure – law, decree, letters)
  • Well balanced contract (and law), notion of economic equilibrium:
    • investors (profitability – tax)
    • state (tax, participation)
    • population (local communities)
  • Human rights and Soft law (EP, extractive industry)

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key provisions key protection
Key provisions, key protection
  • BITs (including for banks)
  • Supranational laws (OHADA, CEMAC, UEMOA, etc)
  • Stability provisions
  • Crisis management and dispute resolution
  • Security over the project/assets/accounts (civil law issues with common law financing – notion of public interest)
  • Direct agreement and step in rights

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appendices
Appendices

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a continent of cultural and legal diversity

Francophone countries

Spanish and Portuguese speaking countries

English speaking countries

Arabic / French speaking countries

Arabic / English speaking countries

A continent of cultural and legal diversity

Like the rest

of the world,

Africa is

a continent of diversity...

…with different

influences

and languages

A world where 6,000 languages are STILL spoken – a number of them in Africa – but one international business language, the terms of which can have different meanings

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national legal systems common law and civil law traditions

An Overview of African Legal Systems

NATIONAL LEGAL SYSTEMSCommon law and civil law traditions

Two legal systems in Africa(sometimes complemented by Islamic law or customary law)

Systems based on civil law principles

French legal system (Napoleonic Code)

Portuguese, Spanish and Italian legal systems

(largely based on Roman law)

Systems based on common law principles

Mixed civil law / common law based systems

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DEPOSIT

What does a lawyer see when he looks at a natural resource project?Necessity for legal clarity where there is factual complexity

DIVIDENDS

HOST STATE

JUDICIARY PRIVATE

LEGISLATIVE

EXECUTIVE

ECAs

ADMINIS-TRATIVE

COURTS

LOAN

COURTS

BANKS

$

$

HEDGE AGREEMENT

HEDGE PROVIDER

HOST STATE’S LEGAL SYSTEM

$

BANK

ACCOUNT

PRIVATE LAW

ADMINISTRATIVE LAW

BANK

ACCOUNT

$

EXPLOITATION PERMITS

MINING

COMPANY

MINING/OIL

AGREEMENTS

DIVIDENDS

INTERNATIONAL

MINING/OIL

COMPANY

$

EXPLORATION PERMITS

SALE

OFFTAKER

$

EPC

(SUB)

CONTRACTOR

WARRANTIES

HOST COUNTRY

OFFSHORE

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