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Rebirth of junior mining, exploration possible with reforms – Baxter

Minerals Council South Africa CEO Roger Baxter

Minerals Council South Africa CEO Roger Baxter

Photo by Creamer Media

1st June 2021

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

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Despite decades of decay in the South African junior mining and exploration industries, Minerals Council South Africa CEO Roger Baxter says a rebound is possible with the establishment of “reliable infrastructure” and “competitive information”, the latter generated by the Council for Geosciences (CGS).

He also says that role-players like the Minerals Council and CGS require access to properties in an effort to engage with land owners and “others” in terms of exploring previously unexplored areas.

As part of its efforts to revive the junior mining industry and the willingness of private investors to fund exploration projects, Baxter says a new exploration plan will encompass the ideas the Department of Mineral Resources and Energy (DMRE) and the Minerals Council have been talking about.

Part of this plan is the phasing out of the DMRE’s dysfunctional Samrad system and replacing it with a modern and transparent cadastre system, which many in the industry have lauded as providing the administration and transparency needed to attract investment back into South Africa’s exploration arena.

In this regard, he points out that the world of geology has modernised considerably, with “mathematicians and statisticians sitting in back offices taking high-level geophysical data and running algorithms on that data” to find geological anomalies and to be able to narrow down on specific regions of interest.

This information would enable potential explorers and even junior miners to more easily determine their next area of focus and spur investment into broader-scale exploration throughout South Africa.

“This is an important part of the process, and having a mining cadastre system that provides the extensive exploration information and enables investors to track their applications in a very transparent system, will help improve confidence in processes,” says Baxter.

CADASTRE

As for the long-awaited South African mining industry cadastre system, he suggests progress is being made into establishing such a system, evidenced in the fact that the DMRE, through its Minister Gwede Mantashe in a briefing at the end of May, acknowledge that the Samrad system was a “mess” with many challenges.

“Samrad has not worked and is not fit for purpose,” says Baxter.

In addressing the fixing of the DMRE’s mining and prospecting right application database, he says that, also towards the end of May, DMRE director-general Thabo Mokoena indicated that the department was looking at releasing a request for proposals for a new cadastre system.

In this regard, Baxter says the Minerals Council suggested to the DMRE, that having in place a system which helps ease the current backlog and publicly makes available rights grants and applications will increase transparency and reduce administration times, as well as automate some processes that are backlogged.

“This should help standardise procedures; it will be a lot more user-friendly, be reliable and secure and will enable companies and government to manage the full lifecycle and understand it.

“We absolutely have to get this system operating as quickly as possible,” he says.

To get such a cadastral system operating as quick as possible could hinge on making use of one of several “off the shelf” technologies, says Baxter.

Also, he says the administering of prospecting applications needs to be quicker by not only halving the licensing time, but rather by undertaking such applications in a quarter of the time it currently takes.

A possible way in which these times could be cut is through reducing human interaction in the process on the DMRE side, suggests Baxter.

JUNIORS & EXPLORATION

What is required to spur growth in the junior mining sector is access, by juniors, to venture capital funding in the South African market, he says.

In this regard, Baxter suggests replacing the Section 12J tax incentive with what he says is a “cap system” to enable a portion of flow through shares, which is critical from a venture capital perspective.

“This would allow the entire flow through of the tax deductibility of the expenditure on exploration right to the venture capital funder,” he says, adding that this is similar to the way exploration incentivisation works in Canada’s mining industry.

Such factors would reduce the investment risk of junior resource companies investing in exploration, adds Baxter.

As for improvements in the exploration sector, he says material progress has been made on outstanding matters, with the Minerals Council and the DMRE engaging on key pillars they think should form part of a new South African exploration plan, to which a task team has been established.

Nonetheless, Baxter says taking the junior and exploration sector forward will require partnerships with broad engagement on different issues and constructive ideas being formulated.

*Baxter was speaking at the Junior Indaba on June 1.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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