MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto

Stéphane Brabant, Partner, Herbert Smith Paris LLP8 March 2011

Strategies for achieving "Bankability" for mining projects in Francophone West Africa

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Profitable but for all stakeholders (Investors and shareholders, States and population)

Legal but also “licit” (e.g. EP and Soft Law)

Secured

And for the life of the project

A “Bankable” Project is to be…

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Africa

High potential/reward (mining and infrastructure), sovereign rights, mining occupies a large part of the economy

Diverse (languages, systems of law, cultures) with some similarities

Stability (change of government, of law, “revisitation”)

To make a project “bankable” with knowledge and respect of the context

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Mitigation of Risks, some key issues

Security of tenures, chain of title, secure of all rights in relation to the full project (exploration, exploitation, land occupancy, infrastructure – law, decree, letters)

Well balanced contract (and law), notion of economic equilibrium:

• investors (profitability – tax)• state (tax, participation)• population (local communities)

Human rights and Soft law (EP, extractive industry)

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Key provisions, key protection

BITs (including for banks)

Supranational laws (OHADA, CEMAC, UEMOA, etc)

Stability provisions

Crisis management and dispute resolution

Security over the project/assets/accounts (civil law issues with common law financing – notion of public interest)

Direct agreement and step in rights

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Appendices

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A continent of cultural and legal diversity

Like the rest of the world,

Africa isa continent of

diversity...

…with differentinfluences

and languages

Francophone countries

Spanish and Portuguese speaking countries

English speaking countriesArabic / French speaking countries

Arabic / English speaking countries

A world where 6,000 languages are STILL spoken – a number of them in Africa – but one international business language, the terms of which can have different meanings

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An Overview of African Legal Systems

Systems based on civil law principles

French legal system (Napoleonic Code)Portuguese, Spanish and Italian legal systems(largely based on Roman law)

Systems based on common law principlesMixed civil law / common law based systems

Two legal systems in Africa (sometimes complemented by Islamic law or customary law)

NATIONAL LEGAL SYSTEMSCommon law and civil law traditions

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DIVIDENDS

DEPOSIT

MININGCOMPANY

HOST STATE

EXECUTIVELEGISLATIVE

JUDICIARY PRIVATE

HOST COUNTRY

HOST STATE’S LEGAL SYSTEM

BANKACCOUNT

OFFTAKER

MINING/OILAGREEMENTS

EXPLOITATION PERMITS

PRIVATE LAW

(SUB)CONTRACTOR

WARRANTIES

SALE

$EXPLORATION PERMITS

OFFSHORE

$

$

EPC

$

BANKS

$

LOAN

HEDGE PROVIDER

$

HEDGE AGREEMENT

INTERNATIONALMINING/OILCOMPANY

DIVIDENDS

ECAs

ADMINISTRATIVE LAW

COURTSADMINIS-TRATIVECOURTS

What does a lawyer see when he looks at a natural resource project?Necessity for legal clarity where there is factual complexity

BANKACCOUNT