[miningmx.com] – THE $120m New Africa Mining Fund II had been discontinued because it “… had difficulties getting traction,” said Tshokilo ‘TP’ Nchocho, group executive of infrastructure finance for the Development Bank of Southern Africa, one of the principle backers of the fund.
“Eventually the participant investors agreed unanimously to discontinue the fund,” said Nchocho in an interview today. He added that there had not been disagreement about differing hurdle rates between DBSA, a development fund institution, and NAMF’s management which included CEO, Neil Gardyne.
The fund’s backers include the World Bank’s International Finance Corporation, the Development Bank of Southern Africa, and the African Development Bank. BHP Billiton South Africa also provided capital to the fund.
The NAMF’s first fund, which deployed about $86m in venture capital projects in the mining exploration sector, was a success and included supporting Petmin’s Somkhele anthracite mine which recently completed its third expansion, and produces about 1.2 million tonnes/year of coal, mostly to the domestic market.
Gardyne said in 2012 that the NAMF II would focus on early stage mining projects in nearly all commodities in Africa except for uranium and diamonds. It typically targets an internal rate of return of about 26% taking up 30% to 40% of greenfields projects.
Nchocho said that DBSA had stepped back from investing directly in mining projects preferring instead to finance infrastructure development.
“If we invest in third party management funds, we thought we’d be able to extend our reach and promote new entry level mining without building up capacity ourselves,” said Nchocho. “That was when we were dabbling in mining as area of investment,” he said.
DBSA today unveiled total disbursements of R12.7bn for its 2014 financial year, a 39% increase year-on-year.
Of this R6.7bn was spent on power generation projects with R3.8bn of that spend pumped into the Renewable Energy Independent Power Producers (IPP) Procurement Programme.
The outcome was a R1.6bn turnaround in fortune year-on-year in which the bank produced a net profit of R787m. The bank was recently refocused on providing infrastructure funding following a cash injection from its shareholder, the National Treasury.
