Norton Rose and Middletons have completed or nearly completed significant deals in the African market, which shows no sign of slowing down.

Norton Rose teams in London, South Africa and Perth worked on a US$205m fundraising deal for Discovery Copper, which will use the funds for the development of a copper and silver project in Botswana. The transaction represents the latest in a stream of debt financings of mining projects in the emerging market. “I have seen a lot of growth in the African work we are doing,” said lead Perth partner on the deal, Douglas Hall.

Norton Rose merged with local South African firm Deneys Reitz on June 1 this year and already Hall has personally worked on three deals with the South Africa team.  A number of deals he has acted on involved Australian companies with African projects which require financing. “There is an expansion in the number of companies in Africa and they need to get money from somewhere,” said Hall. “There seems to be a good demand for debt at the moment, but it has been healthy for equity as well.”

Middletons partner Eric Fethers said his firm has also seen more work related to Africa. “A lot of mining exploration companies, with head offices in WA, are very entrepreneurial in regions that are underexplored or where investment risks are lowering,” he said. “We have a number of clients who either have assets in Australia (miners and non-miners) or assets in Africa. There are lots of different jurisdictions in Africa, some are very underexplored and others that are getting more attractive to investors.” Fethers added that he and his team are currently working on a deal involving an Australian ASX-listed company purchasing three exploration projects in Africa.

According to Hall there are 160 ASX-listed companies with projects in Africa and of those 105 are based in Western Australia. Despite the high numbers, Hall said this hasn’t stopped new players entering the market and new projects being announced. In the past year Hall has seen an increasing amount of M&A involving companies that have mining operations in Africa. “There are a lot of gold projects running adjacent to each other in Africa; owners are now looking at acquiring neighbours so that the economies of scale are able to kick in,” he said.  “I think there will be an increasing amount of mergers, consolidations and takeovers in African mining projects and we will be looking to capitalise on that.”

Fethers agrees, adding that there has been a lot of M&A activity in Africa generally. “China is looking for resource rich countries to invest in, so certainly, we expect more M&A activity involving China in Africa,” he told ALB.

A lot of the acquisition interest is indeed coming from China, as both independent and government-owned companies seek to secure resources to fuel the country’s development. “They are not just restricted to Australia, they are looking to Africa and South America more generally too,” Hall said.  “It’s a growing market and the continued need for resources isn’t going to drop; and if the gold and copper prices continue to increase it makes mining those resources more viable, so we would expect more companies to get involved there.”

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