Bakgatla-Ba-Kgafela Investment Holdings CEO Noah Greenhill
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Strong calls were made on Wednesday for South Africa to come into line with countries such as Canada and Australia by introducing effective incentives for its junior miners as a way of spurring mineral exploration.
Addressing the Junior Indaba on funding and what South Africa could learn from other economies, several speakers made reference to the huge success of Canada’s flow-through scheme as well as incentives put in place recently in Australia, which contains aspects of the Canadian model.
Bakgatla-Ba-Kgafela Investment Holdings CEO Noah Greenhill said that the flow-through tax incentive scheme for junior miners in Canada had resulted in a large number of companies with African assets listing in Toronto rather than Johannesburg, because of the extent to which the scheme promoted retail involvement in the sector.
He urged that a collective should go to Treasury to present the opportunity as a way of encouraging much-needed similar investment in South Africa.
“We need to take a hard look at real tax incentives for the junior sector,” the former Johannesburg Stock Exchange executive urged during a panel discussion, which included input from International Finance Corporation senior investment officer Sacha Backes, Anglo American partnership funds investment manager Alugumi Dzebu and Pangea Group investment executive Boris Kamstra.
KPMG corporate tax head Muhammad Saloojee said the key objective of the Canadian model was to attract equity finance by allowing investors to benefit from the tax deduction for the prospector.
He said that the Canadian scheme had an historical background that proved its worth and said a close watch was also being kept on Australia’s new incentives to boost greenfield projects.
ENS Africa director Otsile Matlou said that South Africa was not doing enough to incentivise exploration and drew attention to the cover article in the latest edition of Mining Weekly, which spells out the significant funding role that the flow-through scheme plays in Canada.
Analysts believe that the Canadian model is tailor made for all minerals-rich countries because of the extent to which it strengthens the appetite of retail investors and hedge funds to invest in early-stage funding, which financial institutions spurn.