Improving Access to Finance Dr. Kevin Telmer, Artisanal Gold Council - PowerPoint PPT Presentation

Improving Access to Finance Dr. Kevin Telmer, Artisanal Gold Council

Economy 500 tonnes of gold from 80+ • countries USD$20 billion /y • 15 million people • 90% of gold workforce • Artisanal and Secondary economy - 100 million • people Small Scale Development Many rural livelihoods Gold Mining - • Largest source of mercury pollution • ASGM Formalization complex • Self sustaining since the 1970s • Maternal and Child Health / • Education Direct transfer of wealth • Remittances very large • 2

What Needs Financing? Individuals Large Group / Site Owners Hard Rock Deposits Soft Rock Deposits Small Group / Family 2 Kilogram Model Typic ical A l Artisanal wit ith M Mercury Modern Gravity S System – Mer ercury F Free ee Typic ical A l Artisanal wit ith M Mercury

Finance is Key In the Transition to Mercury Free Mining Minamata Convention Formalization Access to markets Developing • responsible Access to technology • production Access to finance • Creating downstream demand

Better Markets Practices Finance Investment Minamata The Business Knowledge Case Policy and Awareness Governance Environmentally Outreach Sound, Socially Responsible, Understood, Formalized ASGM sector

Financial Instruments – Suitable for ASGM Equity Debt Partners Bank Loans Risk Industry Mezzanine Revolving Leasing Venture Crowd Sharing Financing Subsidized Public Funds Vehicle Funding Capital Convertibles Facility Gov’t Loans Royalty Streaming

Risk Sharing Facility (Bilateral Loss-Sharing Agreement) Borrower 1 Borrower 2 Borrower 3 Borrower X

Revolving Fund (Line of Credit) Taxes Dividends

Leasing Vehicle Customer 1 Customer X Customer 2 Customer 3

Investors into ASGM Who? Commercial Bank Retail Investors National Development Private Equity Banks Industry Partners Funds/Fund Managers Socially Responsible Institutional Investors Investments Microfinance NGOs Institutions

Needs / Barriers for Miners Ability to Incentives to Health & Trusted Sustainable Operate Change Safety Partners Income Uncertain Lack of Health Lack of Variable Operating & Safety and Lack of Trust Incentives Income Environment Education

Basic Needs of Investors From Regulators / From ASGM Governments Business Stable Mineral Model Corporate Management Rights / ESGs Predictable Vehicle Team (w resource Permit Jurisdiction estimates)

Barriers for Investors Business Stable Mineral Model Corporate Management Rights / ESGs Predictable Vehicle Team Resource Permits Governance Estimates Lack of Lack of No Official Absence of Unstable or Occupational, Formal Experienced Mineral Rights Environmental Unpredictable Standardized and Social Risks Governance Structure Management or Permit Reporting

How Much Gold is in the Ground? • Creating a Valuation Standard for ASGM • Currently regulated by the securities commissions for conventional mining industry • NI 43-101 Canada • JORC Australia • Others • Beyond reach for typical ASGM

Corporate Vehicle Mineral ASGM Manage What is really Rights / Business ment Permits Team missing? Factors that allow financing of Resource conventional mining are not common in ASGM Estimates

Investment for Improvement Educate and Engage Financial Sector, Regulators & ASGM Investment Flows into the ASGM Sector Change the Big Picture by Improving the Small Scale