In a landmark dual-currency deal for Tanzania, fully underwritten by Nedbank CIB, Geita Gold Mining (GGML) was able to borrow US $115m with the participation of local banks at a time when local regulations were evolving.
GGML is one of the largest corporates in Tanzania, and one of the largest mines in the AngloGold Ashanti portfolio. The mine required project financing to expand underground operations. However, in 2018 the Tanzanian government introduced new local content regulations that sought to achieve broad-based participation of indigenous enterprises in the mining sector. That includes the provision of financial services.
Tanzanian banks have traditionally had limited interaction with the large global mines that operate in the country and typically procure financing elsewhere. In addition, foreign investment in Tanzania’s mining sector has been muted since the imposition of taxation-linked fines on Barrick Mining’s Acacia Mining.
“Nedbank CIB is proud to have facilitated another first for the continent in securing this deal. We are more steadfast in our commitment to unlocking value across the continent and it is our belief that the collaboration with local stakeholders will benefit the local community and economy in the long-term,” says Witness Kamera at Nedbank CIB.
Nedbank CIB underwrote the entire transaction and then began the process of distributing a portion of the exposure in Tanzanian shillings. Lenders who expressed interest provided non-binding expressions of interest and based on the responses received, final commercial terms were distributed to banks.
In order to accommodate indigenous Tanzanian banks, their accession into the facilities had to be managed on a bespoke basis, unlike traditional underwritten syndications. Nedbank CIB navigated lenders through the regulatory changes and risk mitigants inherent in the transaction, giving them time to familiarise themselves with the deal.
The result was a first-of-its-kind syndicated Tanzanian shillings mining transaction, using a mechanism where acceding Tanzanian shillings lenders de-risked the existing US dollar lender. It provided certainty for GGML, while sounding out the market for credit appetite among local lenders to participate in local currency.