Aluwani Capital opens R5bn fund for junior miners

Johannesburg - Black-owned asset management company Aluwani Capital has launched a fund that is set to deploy a total of R5 billion towards mining projects in key commodities.

The company, in partnership with VM Investment Company (VMIC) and Ntonga Group Holdings, launched the Aluwani Mining Fund on the sidelines of the Mining Indaba in Cape Town this week and also announced that it has signed a memorandum of understanding with the government of Senegal in order to tap into that country’s massive iron ore reserves.

According to Aluwani Capital CEO Sibusiso Mabuza, the investment, which has a targeted profitability of 20% over the eight- to 10-year fund term, would focus on projects related to coal, vanadium, chrome, manganese and iron ore, with the immediate focus being on local coal.

“There are a lot of good ideas around how we can transform the sector but the reality is, without capital, that transformation will not happen. It has to be funded from somewhere. We are looking to raise assets so that we invest in opportunities,” he said.

Mabuza said the targeted coal projects would also be exposed to export markets instead of just Eskom.

“The fund is looking to make capital accessible to those people who have opportunities but don’t have capital. We want to also bring to the table relationships that open the market to the miners.

“In South Africa, the reality is, when you talk about coal, people think you are producing it for Eskom and, through the relationship we are looking to bring, we want to open markets other than the domestic ones,” he said.

• READ: Four possible futures for SA’s coal mines

Mabuza said the idea was conceived almost six years ago and it was not until recently that the companies decided to join hands to unlock the profits that have been elusive to some of the junior miners.

He said the three partners bring to the table capital and business skills, as well as technical skills, which are the main problems faced by junior miners.

Mabuza said the fund, which will be available to local and offshore institutional investors, would be open for capital inflows from July 1, its targeted soft close and deployment of funds three months later, and then close at the end of the year.

In their respective addresses, VMIC CEO of Lemur Resources Prince Nyati and Ntonga managing director Nthabeleng Ledwaba said that, as partners, their skills set would ensure the fund was more active instead of being passive investors, thereby securing success on proposed projects.

In his address, Minister of Mineral Resources Mosebenzi Zwane said the fund would assist the sector in levelling the playing field.

He said there were almost 50 projects by junior mining companies halted because of lack of finances and the fund would assist in getting some of the projects off the ground.

“Finally what we have been dreaming about is about to be put into practice.

“Be careful on the way because there will be many challenges; you will compete with many big players.

“There is a tendency by black business that instead of doing they always complain,” he said, adding that the partners of the fund have demonstrated that actions speak louder than words.

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