INTRODUCTION:
The challenges associated with obtaining debt finance for a Mining Company in Nigeria is enormous. This is reasonably so because the challenges of the sector have over the years developed the expertise to drain the appetite of the local Banks. The challenges have also able to keep foreign investors as mere spectators hovering over the sector until the right time (no reasonable timeline in view). This has left some Mining companies with mineral title(s) and no funds to operate in the sector.
Despite the constraints, one of the options available to a Mining Company is to apply to be listed on the Nigerian Exchange (NGX). NGX is a multi-asset exchange providing a home to the best of African enterprises listed on its Premium, Main or Growth Boards, diverse fixed income securities, Exchange Traded Products (ETPs), Mutual and other investment funds.
THE LISTING PROCESS:
The NGX has specific provisions in relation to solid mineral companies that may seek to proceed with the listing process. Rule 9 of the rule book of the NGX provides the general requirements that would apply to issuers whose activities (whether directly or through a subsidiary) include exploration for or production of natural resources consisting of substances such as metal, solid fuels, as well as companies engaged in mining, extraction of metals and precious stones or similar activities.
Rule 9.7 provides for the contents of listing documents which include:
Worthy of note is that an application for listing from a company whose current activities consist solely of exploration will not normally be considered, unless the issuer is able to establish:
As soon as all the necessary documents/requirements are submitted, the NGX would conduct a detailed review of the application which may lead to an approval or otherwise1.
CONCLUSION:
The NGX has created a platform that Mining Companies may maximize to access capital for its operations. The NGX has demonstrated its commitment to a more efficient market by reviewing its fees downwards to make access raising more attractive. The Mining Companies may explore this route to raise finance in view of the diminishing light from some traditional local financiers.
* Tobenna Nnamani is a Partner, Team Lead of Mining Practice Group at PUNUKA Attorneys & Solicitors.
Footnote
1. Kindly note that other legislations that may be applicable include the Companies and Allied Matters Act 2020, Investment & Securities Act 2007. The Issuer may also need to comply with other general requirements for listing in addition to specific requirements for Mining companies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.