JOHANNESBURG (miningweekly.com) – Nedbank has closed $540-million worth of mining financings on the continent of Africa in the last 18 months.

Speaking to Creamer Media’s Mining Weekly Online on Tuesday, Nedbank Capital international mining finance head Nivaash Singh said the bank was very much open for business in Africa and foresaw the commodities market entering a space of supply deficit early next year, which would hopefully have a positive impact on depressed commodity prices. (Also watch attached Creamer Media video).

“We’ll consider all projects that are available in the market and ready to be financed,” Singh said.

The bank is happy to back the right projects in the right jurisdictions that have the right management teams, regardless of where commodity prices now stand.

What it has already successfully pursued on the continent are good copper and gold projects, including Aureus Mining’s Liberty Gold project, in Liberia, where Nedbank, together with RMB, provided $100-million worth of debt financing.

Nedbank has also funded mineral sands mining company Sierra Rutile’s Gangama dry mining expansion project, in Sierra Leone, which has effectively taken the company from dredge mining into the excavation of ore in a dry environment.

It has also put out $150-million to First Quantum Minerals, which mines copper in Zambia, and has been very active in the diamond-mining sector in the last six months, putting money behind the London-listed Gem Diamonds and also Mountain Province Diamonds of Canada.

It views Gem Diamonds’ Letšeng mine in Lesotho as being a specially lucrative operation and is also a funder to Gem’s Ghaghoo diamond mine in Botswana, where it has provided a $25-million debt package for the development of what is Botswana’s first underground diamond mine.

More recently, Nedbank co-funded Mountain Province Diamonds’ Gahcho Kué diamond project in the Northern Territories of Canada, together with Scotiabank of Canada and Natixis of Paris.

Mountain Province Diamonds is a 49% shareholder in the joint venture with diamond giant De Beers, which is the other 51% shareholder.

Nedbank, whose mandate in Canada is to lend to projects where there is an African link – in this case De Beers – funded the 49% shareholding component jointly with Scotiabank and Natixis.

De Beers also built the Snap Lake diamond mine in Canada using technology developed and designed in South Africa; for example, the X-ray technology, which found its way into Canada.

“That’s an example of where we can use South African expertise, not just on the financing side, but also on the engineering and operational sides,” Singh outlined.

The two issues that have confronted Nedbank in Africa in the last 12 months have been the Ebola outbreak in West Africa, which has had a negative impact on juniors looking to do projects in Africa, and the advent of terrorism with Boko Haram active in West Africa and Al-Shabaab active in East Africa.

“That’s somewhat impeded the ability of mining companies to progress the development of projects,” Singh disclosed.

While project finance has been Nedbank’s key mining focus in the last ten years, the bank has expanded that scope from project finance into corporate lending to existing producers on the African continent from a corporate balance sheet perspective.

It can provide the entire spectrum of financing to mining companies, project finance for developing companies, corporate balance sheet debt, revolving credit and working capital for companies already in production.

The stated position of Nedbank, which built its mining business on a long-term debt basis, is that it is not a bull market resources bank but one that operates through the cycle.

It has always adopted the approach that if the technical aspects of a project are able to withstand downside scenarios, it will be in a position to design the financing.

It only selects projects with sturdy economics and that come with solid management.

Singh takes the view that feasibility studies must be thoroughly done and decries the tendency of some to rush through the feasibility study phase in order to get into development.

Nedbank encourages the companies that it targets to focus on financing and procurement planning from the outset.

The bank deploys experienced geological, metallurgical, mining engineering and chemical engineering personnel to review the technical data that the mining companies present to it and designs funding on the strength of that data.