Posted: Friday 6th June 2014 at 14:05 pm

List Mining Firms On GSE -To Raise Capital

Ms Rosemary Yeboah



Ms Rosemary Yeboah 
Rosemary Yeboah, Executive Director, Corporate Banking at Ecobank Ghana Limited, has urged mining companies in the country to consider listing on the Ghana Stock Exchange (GSE) in order to raise the needed capital to finance their projects.

She said the companies could also execute rights offerings to raise the requisite capital, adding that private equity could also be a source of funding for mining firms.

Ms Yeboah, who was speaking at the West African Mining and Power Conference (WAMPOC) in Accra on the theme, ‘Addressing the Banking & Financing Needs of Ghana’s Mining Sector,’ said there were many challenges in financing Ghana’s mining sector.

According to her, small mining firms lack the credit history and cash flows needed to secure credit from commercial banks.

‘Small-scale mining projects are vulnerable to the activities of illegal miners, which make the project unattractive to potential investors,’ she stated.

Ms Yeboah said the banks lack of the requisite capital base to finance large mining projects, stating that long-term financing / project Finance increases the risk and reduces banks’ capabilities.

In order to address the financial challenge, she said strategic investors could be wooed to help finance projects, noting that mining firms could sell huge chunk of the project for cash.

She said mining companies can consider the option of selling one project in order to finance another, a common practice in the oil and gas industry. 

Ms Yeboah said the recent recapitalization of the Ghanaian banking sector had positioned banks to finance large transactions through loan syndications.

She said in spite of the challenges, investment in Ghana’s mining sector was rising, stating that Ghana’s mining sector attracted over US$7.7bn in investment inflows between 2000 and 2012.

Ms Yeboah said investment in the sector totaled US$1 billion in 2012 and gold mining accounted for 95 percent of Foreign Direct Investment (FDI) into Ghana’s mining sector in 2012.

She said a review of the tax and royalties regime was underway.

 
By Cephas Larbi
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