The DRA Group, a leading mining engineering firm, is to act as lead technical partner to CCP 12J Fund Limited (CCP 12J) in respect of engineering (EPC/M) and outsourced operations and maintenance services. CCP 12J is a new mining-focused Venture Capital Company, established in terms of Section 12J of the Income Tax Act. DRA will also be a principal investor in CCP 12J.

Stockdale Street, a private equity fund manager which advises DRA’s largest shareholder, is a co-founder of CCP 12J. CCP 12J will leverage off both DRA’s extensive minerals processing, mining engineering and outsourced operations capabilities and Stockdale Street’s disciplined focus on capital preservation, to make mining related equity investments in South Africa. CCP 12J will seek to invest in mining projects which are, predominantly, related or ancillary to existing mining operations and which meet the criteria of a “qualifying company” under Section 12J of the Income Tax Act.

Section 12J was established to assist qualifying companies, including junior mining companies, to access equity finance, while also providing a tax incentive to investors in the Venture Capital Company. 100% of a qualifying investment into a Venture Capital Company is deductible from the taxable income of the investor.

Jean Nel (former CEO of Aquarius Platinum) assisted in the development of CCP 12J as a solution that is aimed at both providing attractive risk-adjusted returns to investors and which will promote capital investment in South Africa’s underinvested mining sector.

Besides the access to the skills and resources within DRA and Stockdale Street, CCP 12J has been able to attract a formidable team of industry stalwarts to senior management and investment committee positions. Paul Miller, experienced Nedbank CIB mining investment banker and former Keaton Energy CEO, has been recruited as Managing Director of the CCP 12J management company, while Mike Clare, financial services distribution specialist, will head up fund raising and distribution. Michael Golding and Tom Borman, both BHP Billiton veterans, and Nigel Townsend, founder of mining engineering firm TWP will all serve on the fund’s investment committee.

DRA has committed an initial R150 million to the CCP 12J initiative. CCP 12J completed an initial 3rd party capital raise after a soft launch in February 2018, shortly after CCP 12J received its Financial Services Provider license from the Financial
Sector Conduct Authority (FSCA, previously FSB) and the Venture Capital Company approval from SARS. Additional rounds of fund raising will occur over the next 18 months so as to coincide with significant personal and corporate tax payment dates (August 2018 and February 2019).

Jean Nel emphasised that “…the fund will not generally look to invest in primary exploration, pre-production mining projects or early stage feasibility studies. We plan to earn an attractive risk-adjusted return for our investors by pursuing lower risk ancillary or secondary mining related projects such as tailings retreatment, dump reprocessing operations or brownfields processing plant expansions, where we can partner with existing industry players and can mitigate as many inherent risks as commercially possible.”

Mike Clare made the point that “…it is in the last 2 years that Section 12J funds have attracted significant interest from financial intermediaries, largely due to the many attractive investment opportunities being presented by a range of 12J companies and the increased media exposure the concept has begun to receive. We believe that Financial Advisers need to consider Section 12J investments as a core part of financial planning for the right profile of tax sensitive investor.

Paul Miller said “…I am very excited by the opportunity – a huge amount of work has gone into putting the CCP 12J Fund and team together. I look forward to bringing to market a competitive alternative source of mining finance.”

For further information please visit: www.ccp12j.co.za