MINING ON TOP: AFRICA-LONDON SUMMIT, June 2014

1

STATE OF THE MINERAL INDUSTRY AND INVESTMENT OPPORTUNITIES IN IN BOTSWANA

Tiyapo Hudson NgwisanyiDirector

Department of Geological SurveyMinistry of Minerals, Energy and Water Resources

Pre Independence Era

2

3

Botswana : at a glance

impressive track record of good governance and

economic growth supported by prudent

macroeconomic and fiscal management,

At the centre of Southern Africa & SADC region

Area: 582,000 sq. km.Population (2011): 2.031 million.

Nominal GDP (2012): $14.50 billion.Real GDP growth rate (2012): 4.2%, (2011): 6.1%.

Per capita nominal GDP (2012): $7,650 .

Natural resources: Diamonds, copper, nickel, coal, soda ash, salt, gold.

Sources of Government Revenue SACU largest share (34%) in 2012/13, first time since

1970’s, Mineral’s share declining: fell from 48% in 2006/07 to 29% in 2012/13

INTERNATIONAL RANKINGS

• Corruption Perception Index – Transparency International (30/177) 2013• The Global Peace Index – Vision of Humanity (32/162) 2013• Mining Report – Fraser Institute (17/93) 2011/2012, (24/112) 2013• Index of Economic Freedom- Heritage Foundation/WSJ (30/185) 2013• World’s Best Countries Index- Newsweek• The Global Enabling Trade Index- World Economic Forum (54/132) 2012• Doing Business Report (World Bank) 2013 Rank =65/189, 2014 Rank = 56• Democracy Index- Economist Intelligence Unit (33/167) 2011• Human Development Index- UNDP (118/187) 2011• Global Competitiveness Index- World Economic Forum (66/133) 2013• Credit Ratings - Moody’s (A2) 2013 • Credit Ratings - Standard and Poor’s (long term: A-, short term: A-2) 2013• Mo Ibrahim Index of African Governance (2 /52) 2012, (2/52) 2013

4

Uncertainty concerning existing regulations

5Fraser Institute – Survey of Mining Companies 2013

1. Maximize the economic benefits for the nation while enabling private investor to earn competitive returns.

– We fully appreciate the concept and practice of internal rate of return in that enterprises are not charitable organisations but adapt corporate social responsibility policies as they thrive.

– We have no restrictions on the repatriation of profits because there are no exchange controls.

– Low level of taxation and – prudent economic management by Government.

2. Create a competitive environment to stimulate private sector investment in mineral exploration and exploitation. – Geological data from previous exploration work freely

availably at the National Geoscience Information center

6

Minerals Policy Objectives

3. Encourage linkages with the rest of the economy to expand value addition activities.– Where economically feasible beneficiation and downstream

activities should be done in Botswana to facilitate economic diversification, e.g for diamonds we attracting companies to relocate to Botswana to cut and polish, provide support service and trade polished and rough diamonds in order to create a diamond trading centre which will out-live the mining operations.

– Suppliers of consumables such as chemical reagents for processing plants and equipment spares are encouraged to setup businesses in the country.

4. Generate employment and training for Botswana’s citizens

7

Minerals Policy Objectives

5. Safeguard the environment – mining operations are required to operate in accordance with good

mining industry practice, to preserve in as far as is possible the natural environment, minimize and control waste or undue loss of or damage to natural and biological resources.

8

Minerals Policy Objectives

Investment Climate

Political stability Safety and security Corruption Top sovereign credit rating Foreign exchange policy Stable inflation Taxation Information and communication technology (ICT) Infrastructure Enforcing contracts Trading across borders

9

Mineral Investment Climate

• Favourable Geological Environment• Progressive Mining Code• Simplicity and Predictability of Mineral

Legislation• Security of Tenure• Commitment to Customer Satisfaction• PPP

10

EXPLORATION INTEREST IN BOTSWANA

• There are currently >1000 PLs for all minerals

• Though exploration expenditure has declined from the 2007 levels there are signs of recovery

• PL overlaps allowed

• PL map (all)

11

Availability of Geodata

The Department of Geological Survey is the custodian of all geoscience data collected in Botswana

By

Government

Exploration companies

Researchers

• Analogue• digital

12

Geological Data

1:1,000,000 Geological map (entire country)

1:250,000 (western Botswana)

1:125,000 (QDS) (eastern Botswana)

13

GEOPHYSICAL DATA

• Reconnaissance aeromagnetic survey at 4km and 1km line spacing

• Detailed high resolution aeromagnetic and radiometric surveys at 200 – 250m line spacing

• Private sector surveys at 50 – 100m line spacing

• Radiometric data covering eastern Botswana

• Gravity - countrywide 14

GEOLOGICAL CONTEXT

• Oldest rock masses in Botswana constitue the Archaean age “basement” which crop out only in the east of the country

• Subdivided into Kaapcaal Craton, Zimbabwe Craton and Limpopo Belt

• Composed mainly of granitoid lithologies• Also presence of Archaean igneous intrusions (Kanye

Volcanic Formation, Gaborone Granite, etc)• 75% of Botswana’s surface is underlain by

Phanerozoic successions of the Karoo Supergroup and Kalahari beds

15

16

Structural Provinces & Tectonic UnitsCarney, Aldiss & Lock, 1994

Kaapvaalcraton

Zimbabwecraton

Mag

ondi

belt

Kalahari cra

ton

Ghanz

i-Cho

be b

elt

Okavango

zone

Congo

craton

Limpopo mobile belt

Kaapvaalcraton

Zimbabwecraton

Mag

ondi

belt

Kalahari cra

ton

Ghanz

i-Cho

be b

elt

Okavango

zone

Congo

craton

Limpopo mobile belt

Kaapvaalcraton

Kaapvaalcraton

Zimbabwecraton

Zimbabwecraton

Mag

ondi

belt

Mag

ondi

belt

Kalahari cra

ton

Kalahari cra

ton

Ghanz

i-Cho

be b

elt

Ghanz

i-Cho

be b

elt

Okavango

zoneOkavango

zone

Congo

cratonCongo

craton

Limpopo mobile belt

Limpopo mobile belt

Ma Lithostratigraphic units Period Era Eon 1.8 Kalahari Quaternary Cenozoic

65 Kalahari Tertiary

144 kimberlites Cretaceous

203 Karoo Supergroup Jurassic

250 Karoo Supergroup (+kimberlite)

Triassic

Mes

ozoi

c

298 Karoo Supergroup Permian

354 Karoo Supergroup Carboniferous

416 Devonian

440 Silurian

495 Ordovician

545 kimberlite Cambrian

Pal

aeoz

oic

Pha

nero

zoic

1000 Ghanzi – Chobe - Okavango

Late

1600

Otse – Waterberg – Palapye (+kimberlite)

Mid

2050 Olifantshoek – Okwa - Gweta

Early

Pro

tero

zoic

2650

Transvaal Supergroup

Vaalian

3100 Witwatersrand

Randian

3600 Barberton - Kraaipan

Swazian

Arc

haea

n

17

Limpopo mobile belt

Kaapvaalcraton

Zimbabwecraton

Okavango

zone

Mag

ondi

belt

Kalahari cra

ton

Ghanzi-Chobe belt

Congo

craton

1.3% Cu – 131Mt, 3%-Pb-Zn-25Mt,

3.5Mt-Ag

stratabound Cu-Ag at Ngwako Pan

minor Cu-Au, mica & Sn in Zimbabwe

Metals Potential

Gold in greenstones

2.4%-Ni/Cu in basic magmatic rock

Ni/Cu in basic amphibolite-

30Mt

Gold in greenstones

Transvaal Super group Stratabound Iron & Manganese

Molopo Farms Complex (Bushveld Complex

analogue) Platinum Group Elements

Diamond in Kimberlite(various ages)

after Norman Lock, 2006

Okavango

zone

Kalahari cra

ton

Mag

ondi

belt

Ghanzi-Chobe belt

Limpopo mobile belt

Kaapvaalcraton

Zimbabwecraton

Congo

craton

Kaapvaalcraton

Zimbabwecraton

Limpopo mobile belt

JwanengIntra-Karoo

(±240Ma)

MabuasehubeMid - Late

Proterozoic

Martin’s Drift

Proterozoic (±1200Ma)

Mochudi/MosomaneProterozoic (±1200Ma)

Tsodilo / Orapa / Gope / Okwa /

KokongCretaceous

(±90Ma)

Tsabong / Lekgodi

Cretaceous (±90Ma)

SikwaneCambrian (±600Ma)

Cambrian(±500Ma)

Coal Potential

19

• Botswana has extensive, and largely unexploited, coal resources which when developed can form part of the Government’s effort to diversify the economy.

• Known coal resources are of the order of 212 billion tonnes

• Current coal mine (Morupule Coal Mine) expanded to produce just under 4.0 mtpa is insignificant in comparison to these resources endowment

• The demand for coal-for-energy has increased significantly nationally, regionally and internationally

Options for utilisation of Botswana coal

• Coal exports• Domestic power• Export power• Coal-to-liquids• Coal-to-gas• Coal bed methane

Fertiliser - Producing nitrogen-based fertilisers from coal, etc.

20

21

Base Metals Industry Review• There are 4 licensed base metal mining operators in Botswana

– BCL Limited: Nickel/Copper– Tati Nickel Mining Company: Nickel/Copper– Messina Copper: Copper– Discovery Metals : Copper & Silver

• Botswana has been mining copper and nickel for more than three decades on the mineralization in the extensive greenstone belts covering much of the East and North East of Botswana. (BCL Limited Mines and Tati Nickel Mining Company Mines)

• The strengthening of copper prices prior to the current global financial crisis has led to renewed interest in the other copper deposits in the North Eastern part of the country as well as those found in the Ghanzi ridge in the west.

• Improvement of the road infrastructure in the western part of the country has the potential to increase the prospectively of these deposits.

The Enabling Mining Environment for Investment

• The Mining CodeThe Mines and Minerals Act, 1999, the centrepiece of

Botswana Mineral Legislation• Mineral rights vested in the State• Law provides for security of tenure and predictability• Virtually an automatic transition from a Prospecting

License to a Mining License the Minister shall ensure, in the public interest, that the

mineral resources are investigated and exploited in the most efficient, beneficial and timely manner

23

Mineral concessions are required to explore for or mine minerals

Four types of mineral concessionsProspecting licenseRetention licenseMining licenseMinerals permit

Legislation

24

Prospecting Licences

Duration: not more than 3yearsRenewals: not more than 2

renewals, each not exceeding 2 years

Area ≤ 1,000 km2 per licenceConsiderations:

• Adequate financial resources, Technical competence and expertice

• Satisfactory Proposed programme of prospecting operations

25

Retention Licences

Conditions• Feasibility study carried out• Approved prospecting programme completed

Duration: not more than 3 years Renewal: Once only for a period not exceeding 3

years

Mining Licences

Duration of up to 25 years Renewable for up to another 25 years

26

Mineral Permits

For small scale mining operationsFor any minerals except diamondsArea not exceeding 0.5 km2 per

permitPermits for industrial minerals

granted to citizens onlyDuration: not more than 5 yearsRenewal: for a period not

exceeding 5 years at a time

27

Government Investment

• No intention for day-to-day management of mining operations

• Non-diamond Minerals– Option for a working interest participation

of up to 15% • Diamonds

– Level of participation reached through negotiations

– Negotiations initiated by application for a mining licence

– Good faith negotiations, failure not foreseen

• Government not a majority shareholder

28

Financials

• Royalties - %age of gross market value

Mineral Type Percentage– Precious stones 10%– Precious Metals 5%– Other Minerals 3%

• Lease rentals– P100/km2 or part thereof

Conclusions

• Botswana is the investment destination of choice in:– Minerals Prospecting– Mining– Downstream diamond beneficiation– Transportation in mining– Power generation– Transmission infrastructure– Renewable Energy Technologies

29

30

Ministry of Minerals, Energy and Water ResourcesP/Bag 0018

Gaborone, BotswanaTel: +267-365-6600Fax: +267-372-738

Permanent Secretary bpaya@gov.bw

Deputy Permanent Secretary (Water & Energy)

kabi@gov.bw

Deputy Permanent Secretary (Minerals)Director of Geological Survey

nmmolawa@gov.bwtngwisanyi@gov.bw

Contacts