AfDB Approves USD 25 Million Investment in New Africa Mining Fund

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Tunis, July 19, 2010 - The Board of Directors of the African Development Bank (AfDB) approved on Monday, 19 July 2010 in Tunis, a USD 25-million equity investment in the second New Africa Mining Fund.

New Africa Mining Fund II (NAMF II) is an equity fund that invests in mining projects throughout Africa.

Like its predecessor New Africa Mining Fund I (NAMF I), NAMF II focuses on the upstream stages of the mining investment cycle where value creation is highest, i.e. primarily exploration and pre-development activities by junior and intermediate companies. The Fund will invest over 5 years and will have a life of 8 years.

The role of mineral resources in Africa’s economic development is undisputed, particularly in the context of the favorable market outlook as a result of strong commodity demand. The African junior mining market remains capital constrained and unable to fully harvest prevailing opportunities. NAMF II therefore intends to mobilize capital for this sector in order to take advantage of the market potential. The Fund is targeting a net return in excess of 20%.

From a development perspective, the Fund is expected to positively influence private sector development, create local permanent and short-term jobs, support balanced revenue sharing, increase government revenues (+USD900 million per year), ensure compliance with environmental standards and promote transparency through the Extractive Industries Transparency Initiative (EITI). The Fund will be guided in its governance strategy by a comprehensive Governance Codex developed in collaboration with the AfDB.

The Bank’s Private Sector Strategy emphasizes provision of equity capital to catalyze the resources necessary to develop assets. The Fund’s investment will facilitate growth and expansion in Greenfield projects across the continent, thus developing African companies in the private sector and promoting growth in a sustainable manner through its Governance Codex and Environmental and Social Management System (ESMS). NAMF II is therefore well aligned with Bank strategy and regional priorities.

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