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Namibia missing out on the next potential oil boom

Namibia missing out on the next potential oil boom

By Martha Nangolo And Lauren Davidson

According to Bannerman Resources CEO, Brandon Munro presentation at the recently held 2017 Mining Expo and Conference, Namibia could benefit from global exploration trends and the nature of exploration companies plays a significant role in how such investment decisions are made.

Anecdotal evidence presented further suggests that investment decisions by foreign investors are stalled due to current policy uncertainty. The current economic climate bodes well for most miners, in an environment where the prices of base metals have recovered and the market fundamentals thereto appear to be promising in the near future, which also translates into a potential up-swing in the subdued exploration trends of recent years.

The mining sector as a whole highlighted valid concerns at the event as to whether Namibia is positioned to maximize on a potential improvement in exploration activities and what could be improved on to harness maximum benefits when such trends reverse.

Junior companies currently account for the largest share of global exploration expenditure, even in Namibia, these firms are significantly smaller than multi-national mining conglomerates and are exposed to a larger degree of risk, Munro said, adding that such companies’ investment decisions are influenced by a range of factors, including the mineral attractiveness of a jurisdiction and the level of policy certainty in the relevant country.

Focusing specifically on how investment into exploration ventures are made, Munro highlighted that investors track global commodity trends scouting for the next “Hot Swing”; a commodity with a favourable price and promising fundamentals.

Munro advocated for active promotion of the mining industry by encouraging junior companies to undertake exploration through efficient license application, processing and issuing procedures as well as the speedy processing of joint ventures.

In as far as the destination is concerned, investors consider political and economic factors of the area they are looking to invest; whether policy and political decisions may soften or worsen potential losses incurred from such investments.

Namibia is well placed to benefit from the next expected upturn in global exploration trends, however, Munro says areas of improvement are glaring. “Industry players have revealed that only a small portion of Namibia’s prospecting areas are covered by active exploration licenses and data from the Ministry of Mines and Energy show that many existing exploration licenses are dormant,” Munro said, adding that Namibians own a large number of these licenses, in the hope of selling to foreign investors through international stock exchanges.

Although Namibia is still a significantly more attractive destination for investment into mining and exploration than most of its African counterparts, the case presented suggests substantial room for improvement to unlock the country’s exploration potential.

Munro cited how current policy changes are keeping investors at bay unlike in 2014 when Namibia was rated the most attractive African jurisdiction for investment into exploration and mining, but has since slid to ninth place in 2016. The report that Munro referenced cited uncertainty surrounding the new Empowerment policy and legislation (NEEEF/B) and Additional Conditions to licences as the main factors leading to a drop in rankings and pronounced negative investor sentiment regarding Namibia’s mining sector.

Munro explained how the unlocking of a country’s potential is crucial in determining investor hospitality, which is determined by a comprehensive geological database, policy certainty and licence application convenience to name a few.

Exploration being the initial stage in the mining lifecycle, underpins the longevity and sustainability of the sector, and should thus not be compromised by uncertainty in investor sentiment, lest the numerous socio-economic benefits of mining be forfeited.

Many exploration companies also rely on credit ratings agencies for a more comprehensive outlook, who consider similar factors in their country analyses. Investors also account for how much support is provided to existing mining players by government in a particular country.

Policy certainty, the timeframe required for mining licence applications to be processed as well as renewals could deter or encourage investment decisions. A clear example of this lies in the results of the 2016 Fraser Institute Survey of Mining companies.

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Following reverse listing, public can now acquire shareholding in Paratus Namibia

Promotion

20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.