South Africa’s mineral wealth and robust public capital markets are among its top assets. Utilizing these assets like other global mining areas is vital, stressed Paul Miller, founder of Utshalo. During a webinar on Wednesday, he highlighted the collaborative efforts to boost smaller investors’ stakes in the Northern Cape’s promising copper reserves.
This initiative mirrors the Australian Stock Exchange (ASX) model for shareholder involvement, allowing smaller South African shareholders to participate via the Johannesburg Stock Exchange (JSE). This collaboration involves Utshalo and Orion Minerals, which is listed on both the JSE and ASX and led by CEO Errol Smart.
“We’ve lacked incentives to encourage exploration and investment through the public market, like flow-through shares seen elsewhere. But, with industry collaboration, this can change,” Miller said.
“We need to channel funds into the ground, develop projects, and use public markets to support them. This will get people working,” he added.
Smart emphasized the potential support for this initiative. “It’s appealing because it’s affordable. We’re trading at 20 cents, and shares are available at 18 cents directly from the company, with no brokerage fees,” he noted in the webinar.
Orion, listed on both JSE and ASX, has 23,000 South African shareholders and is raising capital to advance its Prieska Copper Zinc Mine and Okiep Copper Project in the Northern Cape. South African shareholders, who held Orion shares as of 11:00 AM on June 28, can now participate in Orion’s latest share purchase plan (SPP) similar to Australian shareholders.
“There’s no equivalent to an SPP in South African public markets. To revive our markets, we need to adopt practices from markets like the ASX. Orion, primarily listed on ASX, is leading the way,” Miller, an experienced JSE sponsor executive, said in a statement to Mining Weekly.
“I’m proud that Orion is now almost majority South African-owned. Our share register shows that many Orion shares are held by historically disadvantaged South African (HDSA) shareholders,” he added.
“Probably more than 25% of Orion is owned by HDSA individuals on the stock exchange. This wasn’t forced; it’s good business practice and has proven effective.
“What matters is that we have a company valued at R1.3 billion to R1.4 billion, with 50% owned by South African retail investors. We have R700 million worth of shares in the hands of these investors, who are actively involved in exploration and mine development.
“This indicates a strong appetite for investment. We need to create structures that connect this capital with miners and explorers needing it to move forward. This initiative is an experiment that I believe will open new doors,” Miller stated.
“We were thrilled by the support from the JSE in 2020. We raised the equivalent of A$ 1.3 million without much marketing,” Smart, from Springbok in the Northern Cape, reflected.
Orion has completed a trial mining program at the Prieska mine and has a team conducting a bankable feasibility study at Okiep.
Alongside a placement of 513 million shares at A$0.015 per share to sophisticated investors, eligible South African shareholders can subscribe to the SPP at R0.18 per share. Orion aims to ensure all its eligible South African resident shareholders can participate alongside their ASX counterparts.
Utshalo, a division of Ince and a juristic representative of InsuranceSupermarket Insurance Brokers, facilitates this process. As an Authorized Financial Services Provider, it enables shareholders to engage through Utshalo’s online platform.
Despite being headquartered in Australia, Orion focuses on its South African portfolio. The country urgently needs to revitalize its public markets amid scarce mining capital raises and rising demand for critical metals to combat climate change.
Greater direct retail participation is essential. Utshalo acknowledges the need to rebuild a direct relationship between non-institutional investors and companies seeking growth capital.
Source: Mining Weekly
