South Africa’s Department of Mineral Resources and Energy (DMRE) has signed a Memorandum of Agreement with the Industrial Development Corporation (IDC) of South Africa and Council for Geoscience to advance a fund supporting mineral exploration by junior companies.
The Junior Mining Exploration Fund (FMEF) – with an initial capital injection of R400 million – will be co-funded by the DMRE, the IDC and the Council for Geosciences and supports qualifying enterprises to conduct prospecting work in the mining industry.
“The Council of Geosciences will be the custodian and play a key role with regards to sharing [what is available] with the country and applicants. The DMRE will play an oversight role and really lead and drive this process going forward. The IDC will hold the actual fund and run the fund,” said Ntokozo Ngcwabe, DDG: Mining, Minerals and Energy at the DMRE.
According to Thabiso Sekano, Senior Dealmaker at the IDC: “The IDC is putting an initial capital injection of R200 million and will play a role in administrating the fund. What we see coming out of this fund – with assistance from the Council of Geosciences – is that it will have such a high conversion rate, [leading] to overall mine development in South Africa.”
Initially providing grant funding for enterprises, finance will be converted into equity once a viable ore deposit is discovered. The fund aims to promote economic inclusion by increasing Black junior miners’ access and licenses to mine ore bodies. The Africa Finance Corporation has already expressed interest in supporting the fund, with a Memorandum of Understanding expected soon. The first call for the fund is expected in May 2024.
“This is an accumulation of an exploration strategy drafted two years ago. Today, we are breathing life into this strategy and the goal is seeing the country get more investments into exploration. The launch of this fund signals the commitment and seriousness of the DMRE to drive investments into the mining sector of South Africa,” Ngcwabe added.
Mosa Mabuza, CEO of the Council for Geosciences, noted that “the success of this fund would mean there would be greater appetite and enthusiasm [by investors]. We look forward to delivering those beneficiaries.”
