A number of headwinds have been impacting the mining sector in the recent past, not least of which are macro-economic and policy uncertainties, as well as onerous exchange control regulations. Although there is evidence of some easing of regulations in the sector, and stronger commodity prices over the past few years, smaller producers and exploration companies are frustrated by the struggle to attract capital investors. This is where JSE Private Placements (JPP) works to change the status quo by assisting junior miners that are desperate to raise capital. This is a particularly smart move given the global decline in the number of listed mining companies, including on the JSE, as these organisations move to the energy segment of exchanges or, in some cases, have been reclassified.

Established in December 2021, JPP has grown significantly over the past year, according to Sam Mokorosi, the JSE’s Head of Origination and Deals. Its mandate is to stimulate investment and satisfy the need for private capital placement by offering services to private entities looking to raise debt or equity through its automated and digitalised online platform.

Essentially, it connects private companies and issuers directly to investors, based on investment criteria, and allows private companies to explore access to investor funding.

All potential recipients need do is register on the JPP platform and submit bona fides, such as management profiles and market studies, as well as historical and forecast financials. This information is forwarded to pre-qualified investors who can engage with the data and communicate directly with any business they believe has potential. If the deal is cemented, the JPP platform facilitates payment and transfers the share or loan certificates to investors.

Mokorosi adds that JPP also helps the exchange to make fund raising easier and more attractive without compromising investor protection, and stimulates the appetite to invest in new projects. ‘JPP’s advantage lies in it being an online platform for large mining players to partially, or fully, dispose of non-core projects to qualified investors and project owners, as well as enabling junior miners to explore the fund-raising process more efficiently.’

Without JPP, he says, fund raising for a company can take anywhere from three months to two years. ‘JPP looks to reduce this time frame efficiently and expediently. Any company raising R1 million or more of debt or equity is eligible to be assessed on the merits of their fund raise. At the moment, investors have the highest appetite for profitable operating entities looking to either expand or acquire buy-out funding. We have been elated to see the market response to JPP, especially with investors that have registered on the platform, with collectively over R10 billion to invest.

‘Over the past year we have already on-boarded fund raises of some R5 billion from 20 projects; not all mining related, but we’ve received many enquiries from the broader mineral beneficiation value chain – from coal to gold – water treatment, power generation and tyre recycling, and expect these to go online in this new year,’ says Mokorosi.

There are also likely to be a number of prospectors or those in the early product-development stage, and even more mature mining organisations that need to raise additional capital, especially if they wish to adopt a stronger BEE stance. However, it’s not just companies that benefit from JPP, but broader society too.

‘JPP also serves as a catalyst to help ease unemployment and motivate improved economic development,’ he says. ‘And that is where the JPP team feels the most excitement for its potential.’

By Kerry Dimmer
Image: Gallo/Getty Images