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Understanding and Handling the Challenges of Mining and Mining Business in Nigeria

This presentation provides strategic ideas and suggestions for intervention and innovative strategies in the mining industry in Nigeria. It addresses the major inhibitors to mining development in the country, sources of mining finance, and the Nigerian situation.

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Understanding and Handling the Challenges of Mining and Mining Business in Nigeria

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  1. Understanding and Handlingthe Challengesof Mining and Mining Businessin NigeriaPresented ByDr. Emeka OkengwuCEO: Anthill Concepts Limited8, Kayes St, Wuse Zone One, AbujaCell: 0703230-1400/08073501376Email: kulfana@yahoo.comurl: www.anthillconcepts.com (C) Dr. Emeka Okengwu 070-3230-1400

  2. TABLE OF CONTENT BY SECTION THE MAJOR INHIBITORS TO MINING DEVELOPMENT IN NIGERIA MINE DEVELOPMENT TRAJECTORY SOURCES OF MINING FINANCE THE NIGERIAN SITUATION THE NEW THINKING……Way to go (C) Dr. Emeka Okengwu 070-3230-1400

  3. Synopsis of the Presentation This document contains strategic ideas and suggestions for short, medium and long term intervention and innovative strategies, that could be adopted by the investors in the minerals, metals and steel sector. Specifically, it is intended to assist industry players in reaching business interest and Investment decisions aimed at maximising the exploration. Exploitation and value processing the potentials of the industry. (C) Dr. Emeka Okengwu 070-3230-1400

  4. Some Myths about Mining • States cannot participate in the Exploration and Exploitation of their Mineral Resources Endowments • The Mining Sector is so capital Intensive that no state or small time investor in Nigeria can afford the resources required for its operations • Return on Investments from the Mining is limited and takes for ever The Truth about Mining • Mining project development actually commences with the “states” as they must issue “a consent” before beacons are erected • The capital intensiveness of the mining sector is mostly at the exploration stage where equity more than debt is required, once completed the mine development process runs on clear project based finance models • Once in-situ resources are determined there are returns on investments on all the value chain of the mining sector (mine in production, beneficiation, metals and steel) (C) Dr. Emeka Okengwu 070-3230-1400

  5. THE MAJOR INHIBITORS TO MINING DEVELOPMENT IN NIGERIA (C) Dr. Emeka Okengwu 070-3230-1400

  6. Two-Pronged 1 2 Bottlenecks inhibiting the Nigerian Minig Sector to Generate maximum Revenues through integrated operations Absence of external Financial and technical Partnership and joint ventures Dysfunctional Minerals, metals, steel& infrastructure Dev = +

  7. Prong 1 Absence of definitive private sector driven business projects that tie the development mineral and natural resources to the development support infrastructure:- power rail, roads through a clearly defined value added chain model (C) Dr. Emeka Okengwu 070-3230-1400

  8. Prong 2 Absence of External Financial and Technical Partnerships and Joint Ventures due to: • Lack of defined exploration and project development programs (risk, exploration and venture funds windows in local finance institutions) • Lack of proper definition and understanding of the “front and “back ends” (exploration and exploitation) in the value chain (infrastructure development) (C) Dr. Emeka Okengwu 070-3230-1400

  9. MINE DEVELOPMENT TRAJECTORY (C) Dr. Emeka Okengwu 070-3230-1400

  10. (C) Dr. Emeka Okengwu 070-3230-1400

  11. Typical Sub Structure Value-Chain (C) Dr. Emeka Okengwu 070-3230-1400

  12. SOURCES OF MINING FINANCE (C) Dr. Emeka Okengwu 070-3230-1400

  13. Debt • Equity • Majors • Juniors • Venture Funds • Capital Market • Slush Funds • Multilateral/Donor Agencies • Mineral Development Tax Funds (Government) (C) Dr. Emeka Okengwu 070-3230-1400

  14. THE NIGERIAN SITUATIONCATALYSTS OF THE INHIBITORS TO FUNDING EXTRACTIVE SUB SECTOR IN NIGERIA (C) Dr. Emeka Okengwu 070-3230-1400

  15. Nigerian Capital Market • Insecurity of Mineral Titles • Absence of Cogent Baseline Data • Incoherent Government Policies • Absence of Junior Mining Companies • Absence of Venture Capital • Bank Finance Products (C) Dr. Emeka Okengwu 070-3230-1400

  16. Effects of the listed factors on the Nigerian Mining Industry (C) Dr. Emeka Okengwu 070-3230-1400

  17. Inappropriate Back end programs for raw materials due to: Lack of defined exploration and project development programs (risk, exploration and venture funds) occasioned by:- low understanding of the synergy between the (exploration and exploitation of key minerals:- Dolomite, Manganese, Lime stone and other potentials of Iron ore) in the value chain of; Minerals, Metals and Steel Developmentin Nigeria (C) Dr. Emeka Okengwu 070-3230-1400

  18. Resolving the Issues of Funding the Nigerian Mining Industry (C) Dr. Emeka Okengwu 070-3230-1400

  19. (C) Dr. Emeka Okengwu 070-3230-1400

  20. Stages of Mine Development Funding Structures • Prospecting • Conduct reconnaissance to identify mineral occurrence • Obtain Mineral Exploration licence • Identify mineral ore-body on acreage • Pitting and trenching to identify mineral vein • Initial (30m) max drilling campaign • Assay testing of ore-recovered from veins Stage 1 Funding Structure: Project DevFinance (Patient capital ) Cycle Time: 12 months Stage 1 Funding Structure: Joint Venture SPV to raise Convertible Solid Mineral Development Bonds From Local/Int Capital Mkts Cycle Time: 1 – 2 yrs • Exploration • Conduct a core-drill program on the acreage to ascertain the proven reserves tonnage of the mineral ore on the acreage • Valuation of the tonnage of proven ore reserves • Further Assay testing of ore-recovered from further depths • Development of a mineral ore extraction plan • Environmental Impact Assessment Stage 2 Stage 3 Funding Structure: Private Investors from Local /Int Capital Mkts Cycle Time: 1 - 3 yrs • Development & Extraction/Processing • Financial Closure • Obtain Mineral Extraction licence • Deploy earth moving equipment for ore extraction • Construction of access roads and mine-market infrastructure • Deploy equipment for ore processing Stage 4 Mines to be converted To Farms: Funding Structure: Sinking Fund From Revenues • Reclamation & Closure • Complete mine reclamation at the end of the mine-life as detailed in EIA

  21. HOW TO ACHIEVE THE MODEL (C) Dr. Emeka Okengwu 070-3230-1400

  22. Structuring Local Mineral Exploration and Exploitation Companies to raise funds from local and international capital markets through debt or equity financing through promoting: • Joint ventures between local mining companies and junior/major international mining companies, producers and end users • Structured project based funding for integrated infrastructure and mining/value added projects development • Venture funds to finance sustainable and bankable feasibility studies for mining and value added development projects Nigeria • Initiating programs to improve the technical capacity of local indigenes to gain employment in mining/value chain industry. (C) Dr. Emeka Okengwu 070-3230-1400

  23. It was an Honor to address this distinguished audience Thank you Dr. Emeka Okengwu (C) Dr. Emeka Okengwu 070-3230-1400

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