Mining Indaba 2019, South Africa

Published on 22 February 2019

We recently returned from the annual jamboree in South Africa known as Mining Indaba. Numbers were apparently strong for the various events that take place around Cape Town in early February – not least based on the number of reports of hotel ’gazumping‘ that were being reported around the city. We were not immune from this, having two hotel reservations cancelled on us in quick succession. We were lucky, though – we know of at least one CEO who ended up sleeping in a dorm room after losing his reservation at the last minute.

As usual, the great and the good were out in force in Cape Town, including top executives and heads of state (the entire main conference seemed to shut down when President Ramaphosa showed up), and the main Indaba conference was, as always, awash with the usual array of service companies. What was missing, largely, from the main showcase event were aspiring mining companies looking to attract new investors and do deals. These conversations were all taking place in side events away from the main Indaba conference – with mixed results.

Cutting through the usual bravado, we felt there were a number of themes that kept recurring for the smaller companies looking to attract attention at Indaba. Early-stage explorers seemed to be fairly happy as long as they were not accessing material pools of capital. Developers, however, were overall having a tougher time getting projects through sanction. We met a large number of companies who were ’shovel ready- – debt, offtake and EPC all in place – but the remaining equity component was the elusive key to getting through sanctions.

At one of the side events that we attended, we often felt that the most popular guys in the room were the streamers. Possibly more than ever, the streaming and royalty models in today’s capital markets have merit, being able to offer a less equity-dilutive bridge to overcome short-term challenges in return for a lucrative, long-term revenue stream. The challenge for the junior miners is squaring how this sits alongside traditional sources of funding, in particular debt.

In terms of commodities, many of the events were being anchored around the battery metals theme. These have long since moved on from being predominantly lithium focused to now embracing the entire gamut of battery metals: graphite, vanadium, cobalt, nickel, rare earths etc. In an interesting move, Indaba itself was playing with the idea that not only were traditional miners having to compete for capital with battery metals players, but also with marijuana. Our Charlie Gibson even had to moderate a panel on this at Indaba (as well as Arlington Pre-Daba, pictured above) and it is not as mad as it seems – mining equity markets have had to accept for years now that the competition for capital crosses both sector and geographic boundaries.

Projects need to offer sufficiently attractive returns on a risk-adjusted basis for them to compete with the range of other investment opportunities out there, both in mining and further afield. Our annual mining report goes to the heart of what projects need to return at different stages of development to attract equity investors – for more information go to our website at:

Gold stars and black holes

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