Scipion Capital

Investing in African Mining Indaba 2019

www.scipion-capital.com
The upswing in the mining industry, which was reflected at the 2019 Investing in
African Mining Indaba in Cape Town this month, has opened up exciting opportunities
for Scipion Capital (Scipion).

Angus Macdonald, Scipion’s General Counsel, based in London, was upbeat about
projects which had survived the downturn cycle. Together with the more optimistic
outlook for a number of commodities, Scipion expects elevated commodity prices,
improved agricultural conditions and stronger US Dollar, which has seen better returns
for investors with loans pegged to LIBOR, lead to wider opportunities for investing in
Africa, he presented to Moore Stephens’ Global Mining and Resources Partners at their
Global Collaboration Meeting.

The improved outlook towards commodity prices, particularly iron ore, coal and base
metals, has been a boost for the sector.

Scipion’s partners and staff from Africa, London, Switzerland and Australia attended
the 2019 Investing in African Mining Indaba, as well as side events.

Nicolas Clavel, Scipion’s Chief Investment Officer based in Geneva, said it was clear
that borrowers in the mining and resources sector that had tightened up on their costs
over the past few years were in a stronger position.

“Global demand for select commodities has been steady, with record levels of coal
exports and high oil prices.”

“Founded in 2007, Scipion has a strong track record of funding the mining industry
through private debt. The lack of available finance in the SME sector in Africa, which
was the genesis of Scipion over a decade ago, has seen an uptick in non-bank lending,”
said Clavel.

Scipion has partnered for many years with the International Finance Corporation and
UN International Labour Organisation in the agricultural trade finance space.

As Scipion’s investor base is institutional (pension funds, banks, large corporates, DFIs),
we see more lender demand for environmental, social, impact (ESI) progress. Our
funding base is predicated on our borrowers doing more than what local law and
regulation requires but meeting ESI hurdles … exceeding them.

Scipion has witnessed steady interest in iron ore, manganese, coal, copper, lead, zinc
and oil offtakes financed by its flagship Cayman Islands fund.

Borrowers have been pan-African; however, Kenya, Uganda, Botswana, Morocco, South
Africa, Ghana and Cote d’Ivoire remain market mainstays.

Treatment of mine waste, as a result of technological developments, is an increasing

source of value for African miners. Scipion is partnering with an AIM-listed South
African gold tailings processor, transforming fine carbon, steel/rubber liners, cathodes,
anodes, slag, high grade woodchips and screens into value.

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This innovation provides mining operations cost-effective products in the period when
the pressure is to reduce cost reduction.

Sentiment at this year’s Investing in African Mining Indaba, attended by more than
6,000 miners, suppliers, traders, financiers and service providers in Cape Town, reflects
Scipion’s view that 2018 should be regarded as a positive year for African mining and
resources.

The general themes have been economic recovery linked to commodity prices and
political reform in certain countries, however, problems of oversupply of commodities
and ongoing geopolitical tensions will continue.

There are no clear signs that banks’ appetite for business in the SME mining sector will
increase, so the funding gap will continue to be filled by the private debt industry.

Despite the challenges, Scipion sees the African resources industry holding significant
growth potential for investors in 2019, with significant investor interest in SME
markets.

Scipion remains well placed to partner with miners and processors in Africa and help
them to chart the ESI regulatory landscape.

Legal Disclaimer:

The information contained in this document is not intended to be financial or legal

advice. No reliance may be placed for any purpose on the information and opinions
contained in this document or their accuracy or completeness. Opinions expressed
herein may not be shared by all employees of Scipion Capital Ltd and are subject to
change without notice.

© Scipion Capital Ltd (2019)