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Careful area selection is key to any exploration programme.
SRK itself does not invest in projects, but we advise our clients
to spend time and effort in getting this selection right. The
opportunity cost of getting it wrong can be significant. Our
message is generally: define which commodities to explore for,
select jurisdictions that meet one’s risk appetite, and understand
the minimum exploration target size that is significant in
one’s business. These parameters can then be matched to an
appropriate geological domain.
Which regions or countries in Africa, would you regard as the
most attractive in terms of geology but whose deposits are not
as accessible for exploration due to infrastructure constraints,
political insecurity etc. In other words which countries would
you wish to explore but are not able to?
Presently, North and West Africa are becoming increasingly
difficult to operate in from a security point of view and come
with the additional challenge of exploring under cover. Niger and
Sudan, for example, both fit into this category. The Jabel Oheir
copper porphyry deposit in Sudan is an exciting new discovery
and the first of its kind on the Nubian shield. The DRC also
contains large metallogenic provinces which are not fully explored
but are increasingly difficult to operate in – with challenges
ranging from political instability to lack of infrastructure.
What challenges will exploration companies venturing into Africa
have to look out for in the next three years or so?
The availability of capital for higher risk jurisdictions will always
be a primary challenge, with money opting to reside in safer
jurisdictions and other competing non-mining opportunities.
The threat of another global recession would not bode well for
the exploration industry, which has had a shaky decade. As an
industry, it is important to work on improving on the rate of
discovery success to improve the return on capital and make
exploration a more attractive investment option. This being
said, the increasing ‘cost of discovery’ is squeezing out smaller,
poorly capitalised companies from making effective exploration
attempts, and the future of exploration may ultimately fall back to
the majors.
Access to skills is a challenge, particularly within the fields of
remote sensing, machine-learning, prospectivity modelling and
advanced geochemistry and geophysics. This can be mitigated by
integrating specialist consultants into decision-making processes.
Across Africa, there is an increased requirement for social
engagement and local content. Where there is uncertainty, this
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Eritrea has great geological potential that
has seen limited exploration. The government is coming in from
the cold and is looking to show that it is open for business. They
hope that the international banking community will recognise
this. Egypt is in a similar situation and has already made good
progress with its government delivering the right messages.
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The biggest risks tend to be non-
geological. Any of the jurisdictions
mentioned above represent perhaps the
best new opportunities on the continent;
whether these are taken up will depend
on the provision of favourable legislative
frameworks and mining codes, increased
transparency and security of tenure.
K E
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Which country or countries in Africa
– taking into account the risks, the
geology and the infrastructure – would
you most likely invest time and money in
to explore if you could do that in 2020?
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can certainly be challenging. However, this may also be seen
as an opportunity to build better local partnerships with host
governments and communities which are serious about long-
term, sustainable growth.
Security in North and West Africa is a notable concern, with
increasingly targeted attacks on mining activities and personnel.
Minerals like lithium, graphite and cobalt are punted as potential
money spinners for African countries like Zimbabwe. What are
your thoughts and opinions? Should countries like Zimbabwe
rather look at their traditional minerals like platinum and gold?
Many of these minerals tend to operate in bubbles and the
exploration spend tends to be reactionary, so it is difficult to
maintain the sustained investment required to identify, assess and
evaluate deposits. For any country endowed with these minerals,
it is of course in their interest to commoditise and exploit these
resources and diversify its minerals sector as much as possible,
which in turn will make it more resilient to commodity price cycles.
What is required is a government focus on geological data
sources, infrastructure and legislation to develop multi-
commodity metallogenic regions and diversify commodity risk.
This would support these minerals bubbles and fast-track the
economic realisation of these mineral opportunities. This requires
very proactive legislation and government assistance, and we
really don’t see enough of this yet.
Where do you foresee growth in terms of exploration and mining
in Africa in the next three years and why?
For the reasons discussed previously, Egypt is looking to see a
growth in exploration activities following positive moves by the
government. Cote d’Ivoire could also see increased exploration
spend as a regional growth point in West Africa.
What are the potential pitfalls for exploration companies
venturing into Africa?
With the many operational challenges, exploration tends to be
too slow-moving. It is important to get area selection right from
the beginning and then to adopt a ‘fail fast’ approach, that is, to
dispose of low potential opportunities early and focus only on
the best ones. One typically needs to turn ground on hundreds
of targets to find one deposit, so one cannot afford pet projects.
Hand in hand with this is conducting proper technical and
corporate due diligence on investment opportunities.
What new geological equipment and technology is available that
will make it easier to find big deposits in Africa?
The next discoveries will be increasingly under cover so we
need to adopt techniques that can help us to do this. Ionic leach
African Mining
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