Messina Copper (Botswana) (Proprietary) Ltd, trading as African Copper Mining, has just completed the issue of a BWP 150.0 million local currency bond. The bond pays a semi-annual fixed rate coupon of 14% per annum and matures on the 2 April 2015. African Copper Mining is a subsidiary of African Copper Plc, which is listed on the Toronto Stock Exchange (‘TSX’), the London Alternative Investment Market (‘AIM’) and locally, on the Botswana Stock Exchange (‘BSE’). A listing is being sought for the African Copper Bond on the BSE and this is expected to have been obtained towards the end of this month.
The bond was co-arranged and placed with local Botswana institutions by Fleming Advisors Botswana (Pty) Limited (‘Fleming Advisors’) and Stanbic Bank Botswana Limited. Fleming Advisors is a Fleming Group company, based in Gaborone. It is the leading debt origination and specialist fixed income solution provider within the resources sector in Botswana.
The Fleming Advisory team continues to play a pioneering role in the local Botswana debt capital markets. Its African Copper Bond is the second resource bond to be issued in the local Botswana market, with both of those bonds having been arranged by Fleming Advisors. This Bond follows the BWP 50.0 million convertible listed bond issued by Diamonex Limited, an Australian based diamond mining company, that is dual-listed on the BSE, AIM and the Australian Stock Exchange.
Fleming Advisors remains excited about Botswana’s emerging resources sector. Its efforts have enabled foreign mining companies to raise capital in the local capital markets and this supports the notion of creating more varied and diversified investment opportunities for local Botswana institutions and investors. Such issuance of resources bonds does also provide fixed income investors with much needed portfolio diversification. Co-incidentally, these initiatives support the Vision 2016 economic diversification objectives of the country.
Historically, it has not been an easy task to convince foreign companies to raise capital within the local African markets in which they operate. A multinational first needs to be convinced that the local African markets have the required level of sophistication to fund their projects. This kind of view needs to be taken if these companies do actually move away from their comfort zone and raise capital in the emerging debt market space.
Fleming Advisors believe it is important for investors to support such mining projects in the early pre-production stages of their development, in order to further develop local African capital markets and establish sustainable businesses. The merits of aggressively bringing such opportunities to market with the support of local Botswana institutions will bode well for future investment opportunities in the resource sector, as the sector evolves in an environment of buoyant global commodity prices.
The African Copper Bond was 20% over-subscribed, with investors actually receiving a lower allocation than they had applied for. The interest in the Bond from local institutions exceeded all expectations and, as such, it indicates investor confidence in the viability of the Mowana Mining Project. It would appear that the African Copper management team is equally excited about the commitment shown by local investors towards their Project and hope to continue to develop sustainable ventures with the Botswana investment community going forward. (Fleming Advisors)