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October 23, 2018

 

Section 12J Investment Spotlight:

Equity Finance in the Mining Sector.

Emceé Nell

Chief Financial Officer

One of the biggest restrictions in the mining sector, especially for junior mining exploration, is access to equity finance.

 

With the South African economy in a technical recession, access to equity finance is becoming an even harder commodity to access for most mining companies, although opportunity in the industry remains rife.

 

Traditionally, the mining sector in South Africa has always formed the backbone of the South African economy – providing needed opportunity and employment for multitudes of South Africans through various mining explorations that have culminated in the exponential growth of the economy. However, with the turn of the century and the onset of the new Industrial Revolution led by the technology sector - the mining sector has been seen as a risky, if not unwelcomed destination for investment. This is a harsh judgement that has been tabled against an industry that still has significant growth potential and holds great future benefit for the country’s economy.

 

Often referred to as the ‘sunset industry’, a lack of investment in this sector has led to stagnation and uninspiring growth, and inadvertently, damage to the economy… No surprise there. Banks often refer to mining investments as “too risky”, leading to a lack of equity funds for ambitious mine owners with an interest in growing their already successful interests.

 

This is where Venture Capital Companies (VCCs) are best positioned to provide impetus - especially those focused on providing value beyond the daily functions of the company.

 

With a focus on providing equity funds to growing companies, VCC’s also provide a 100% tax deductible investment vehicle. Decreasing the risk investors take in companies by providing a tax-deductible benefit. Emceé Nell, CFO of Capitis Equities, adds that, “While access to funds continues to be important for South African SMME’s, the biggest determinant on which a company takes the lead in an industry is still down to the strength of their people, their plans and their intangible resources.”

 

Helping the mining industry grow and continue to help alleviate many of South Africa’s socio-economic issues is critically important. To this end, we at Capitis Equities are committed to investing ourselves into a prosperous economy, and are working to create value and stimulate growth in one of the South Africa’s most mature sectors.

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Capitis Equities company logo
Capitis Equities company logo
Capitis Equities company logo
Capitis Equities company logo
Capitis Equities company logo
Capitis Equities company logo