Mining industry wants Exploration Fund
Stakeholders in the Mining Industry have called on government to take deliberate action to ensure that Botswana’s underground mineral resources are taken full advantage of. The Mining industry made this call at the Botswana Resources Sector Conference held in Gaborone last week.
Stakeholders proposed that in order to sustain the future of mining in this country, government needs to participate directly in funds mobilization for the heavily capital intensive and risky prospecting and explorations stages of setting up a mine. Nigel Forrester of Mount Burgess Mining submitted that it was difficult to raise capital towards finding new mineral depositions.
He explained that foreign investors often question lack of input from Botswana financial institutions and investors. Forrester argued that for exploring companies to achieve investor confidence and adequately woo global capital, domestic funds must hold a significant stake in the exploration companies. “First question investors ask is how much Botswana funds are injected in the project and the honest answer would be none,” he said, explaining that this would then scare off potential exploration funders from outside who reason that Botswana’s zero participation signalled no confidence on the prospected deposits.
“This then makes the whole funds mobilization excursion very difficult for us. Global funders are reluctant to pop out their money because local finance chain is not taking the lead.” Forrester, whose company is currently exploring Lead Zinc & Silver reserves in Kehabi says Botswana needs to partake fully in securing funds for new explorations if at all new mines are to be developed. “The underground resources are there, in economically minable grades and quantity so we need government to assist us in this process so that we in turn create the much needed jobs,” he said.
James Campbell – Chief Executive Officer of Botswana Diamond PLC said it was advisable for government to establish a strategic exploration fund that will be managed by the Mineral Development Corporation Botswana (MDC). “The housing of Botswana Government mining and mineral interests in one port under MDC was a great move, now the company needs to go further and actually push the development and utilization of these world class high grade deposits and resources Botswana is sitting on,” he said.
James noted that MDC needs to be allocated a certain percentage from mineral revenue and royalties by its shareholders, being the government, “This move requires political will and deliberate action from the government to actually resource and give MDC green light towards investing in these exploration companies with equity and wait on long term profitable returns and massive job creations,” he said.
Campbell further added that South Africa had recently announced the establishment of an Exploration Fund for junior exploration companies, citing that Botswana could set up Mining Incubations which encompass skills exchanges, financial provisions and other prospecting and exploration requisites.
THE FUTURE OF BOTSWANA DIAMONDS
On other deliberations Botswana’s most valuable mineral resource, Diamonds, which are currently the anchor of the economy are said to be depleting annually with the only way being to go underground if mining was to continue, albeit at a heavy cost. Mike de Wit, President and Chief Executive Officer of Tsodilo Resources said there were prospects of extending Botswana‘s Diamond industry to an extra 2–3 decades beyond the current prospected life span of Botswana mines which is around only up to 2050.
Wit said Jwaneng and Orapa were sitting on one of the world’s most valuable diamonds, the kimberlites, “These kimberlites are only 7 in the world and some are in Russia.” “To mine the waste, that is the tailings, will take our mines further but not forever, so new prospecting and exploration needs to be undergoing to find and indentify new deposits,” he highlighted.
Lamenting on Wit’s words Renowned Diamond Hunter who discovered Orapa mine, Leon Daniels said Botswana mining and mineral policies needed to be reviewed in order to facilitate and enable new diamond exploring companies to find new minor diamond reserves.
Daniels explained current taxations and cumbersome regulatory processes with frustrating turnaround times can only be afforded by big Companies like De Beers.
“These multi-nationals are only interested in high grade kimberlites, this now means that minor mineralization’s with 20-25 developed mine life span are left neglected because junior exploration companies don’t last long due to unfriendly and outdated policies,” he said.
Daniels who previously worked for both De Beers and Anglo American highlighted that Botswana’s move to be a global Diamond hub needs to be a reality other than just talk.
“If you look at countries such as Mauritius, they do not have any diamond mining but are doing exceptionally well in diamond cutting and jewellery making, why is Botswana still lagging behind?” he said. According to Daniels and other experts Botswana can seal any diamond mining, sales and processing deal in its own reasonable terms and conditions which benefit Batswana better.
“We are talking about high grade diamond kimberlites that are very scarce and rare to find anywhere else in the world, so Botswana needs to up its game at the negotiating tables and as a matter of urgency seal more deals which will out mass job creation for its people,” reiterated Leon Daniels.
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Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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