Exploration Project Funding New

Funding Exploration Project In
Nigeria
www.seisimaginresources.com
Global Exploration Spending
• 8.4 billion dollars spent in exploration globally 2017
• 10 billion dollars in 2018
• Expected to increases by another 20 percent in 2019
Global Exploration Spend
Source: S&P Global Market Intelligence, 2018

Global Exploration Expenditure by Stage
Source: S&P Global Market Intelligence and PDAC analysis
Global Exploration Spending by Type
Source: S&P Global Market Intelligence, 2018
Global finance Exploration Expenditure by Region (US$B)
Exploration financings by junior and intermediate companies
Exploration Trend
• Shift in exploration focus from more established mining regions
including Australia and Canada.
• In the last decade Canada’s share has declined from around 21% to
below 15%
• Latin America has increased from 21.8% to a high of 30% in 2017.
• Africa was in 3rd place in 2016
• Exploration is an inherently high-risk/high reward activity
• Mine is developed in a well-thought-out process from

exploration, feasibility studies, construction and operations
Capital raising option
• Prefeasibility and bankable feasibility studies can be difficult or

expensive to source from listed equity markets.
• Private equity offers a more flexible funding options
Capital raising option
• Farm in finance
• Equity finance
• Project finance
• Development finance
• A debt facility
• Royalty finance
• Streaming finance
• Offtake finance
• A corporate bond
• EPC contractor finance
• Equipment finance
Key financing options for mining companies
Mine development phases and funding sources
Reality
Challenges
• Project sponsors inability to show that project risks are manageable
• Sponsors do not fully understand the risk associated with the projects
and invariably cannot show that the project risk is manageable.
• Inability to build a business case for the project.
Funding option
• Most projects in Nigeria are still at the exploration stage
• Exploration projects are non revenue generating projects
• Products are the data and information generated to prove up the resources
• Debit financing is not an option
• No future cash flow to service the debit
Private Equity
In the last decade, the private equity sector in Nigeria has grown from
about three main players with about US$75 million under
management, to ten or more indigenous players with about US$2
billion under management, 15 international funds and about 30 new
funds under formation.
Nigerian government strategic goal
• Nigeria is looking for investments of $7 billion in mining and steel over the next
decade as it seeks to develop gold and iron ore extraction industries to diversify its
oil-dependent economy.
• Nigeria aims to increase mining's contribution to gross domestic product from 0.3
percent in 2015 to 7 percent within a decade: from $1.44 billion to $33.67 billion
• It also plans to create a $1 billion mining exploration fund from state and private
capital to improve data on Nigeria's mineral wealth. Each exploration project will be
supported with about $5 million.
• The government has created a local minerals investment fund of $500 million
injected for the sector
Nigerian government strategic goal
• In the last decade, the private equity sector in Nigeria has grown from
about three main players with about US$75 million under
management, to ten or more indigenous players with about US$2
billion under management, 15 international funds and about 30 new
funds under formation.
Conclusion
• Most Exploration and mining companies in Nigeria do not have geologist/mining
engineer with technical expertise has key member of the board
• Need to start seeing data and information from exploration (drilling, geochemical
survey and geophysics ) as a product
• Select, carefully and with skill the best exploration projects for investment
• Ensure these projects are advanced with the best science and technical discipline
• Need to realize that development from exploration to mining in greenfield takes

time

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Funding Exploration Project In

• 8.4 billion dollars spent in exploration globally 2017

• 10 billion dollars in 2018

• Expected to increases by another 20 percent in 2019

Source: S&P Global Market Intelligence, 2018

Source: S&P Global Market Intelligence and PDAC analysis

Source: S&P Global Market Intelligence, 2018

Source: S&P Global Market Intelligence and PDAC analysis

Source: S&P Global Market Intelligence and PDAC analysis

• Latin America has increased from 21.8% to a high of 30% in 2017.

• Africa was in 3rd place in 2016

• Mine is developed in a well-thought-out process from

• Prefeasibility and bankable feasibility studies can be difficult or

• Private equity offers a more flexible funding options

• Project sponsors inability to show that project risks are manageable

• Inability to build a business case for the project.

• Exploration projects are non revenue generating projects

• Debit financing is not an option

• No future cash flow to service the debit

• Need to realize that development from exploration to mining in greenfield takes

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