Although mining companies and junior miners are struggling to secure funding for projects, listing on a stock exchange may offer opportunities for these companies to raise capital and grow their businesses, says exchange trading platform 4 Africa Exchange (4AX) business development head Noah Greenhill.
He tells Mining Weekly that the environment in South Africa is not currently attractive and conducive to investment and companies are looking to invest in other jurisdictions in Africa.
“I am not sure that South Africa is rolling out the red carpet for investors. There are many hurdles and significant liabilities for companies to explore. We have to create an environment where investors and mining companies want to spend their money.”
He adds that the registration of mines and licensing should be made easier and that mining industry stakeholders must be accessible. Moreover, he suggests that incentives, such as tax incentives, should be put in place to encourage exploration and investment.
“Investments will result in a multiplier effect and massive employment spin-off, as well as economic activity.”
Greenhill emphasises that South Africa should be the marketplace for mining companies on the African continent, describing the fact that there are currently more mining companies with African assets listed on offshore exchanges than there are mining companies listed on African exchanges as “a travesty”.
He puts forward that, locally, the mining industry and investors do not tolerate project failure, “but they have to realise that exploration, by its nature, is risky”.
Meanwhile, he asserts that if 4AX can attract more junior and exploration companies to the marketplace, the exchange will be like a shop window for South African investors.
Greenhill says 4AX’s listing requirements are conducive to the nature of businesses that list on 4AX and ongoing obligations are appropriate to the nature and size of a company listing.
“It is easy and cost effective to list on 4AX and the exchange provides a good trading environment,” he notes.
Listing provides market value for companies and enables shareholders to trade in the stocks. Moreover, it enables companies to raise capital from a wide investment community space.
Further, 4AX can restrict trading to members of certain communities in terms of companies’ social licence to operate and community involvement requirements.
It aims to attract several mining companies to the marketplace and to provide a mechanism for them to achieve their strategic objectives, subsequently leading to the exchange achieving its strategic objectives.
“The more companies list, and the more they are successful once listed, creates a virtuous cycle,” Greenhill concludes.