1. ALIGNING LOCAL BANKS TO FUND MINING ACTIVITIES IN ZIMBABWE Presented By Robert Thomas Zawaira Presented By Robert Thomas Zawaira

2. STRUCTURE OF PRESENTATION 1.Sources and Purpose of Funding 2.Are banks aligned to fund mining in Zimbabwe? 3.Challenges faced by local banks 4.Policy Interventions 5.Syndication of facilities

3. Sources of funding for mining companies? Local mining sector has traditionally been financed through:- Internal funding from revenue inflows Shareholders equity Debt finance Structured finance and Other sources of funding Purpose Asset Financing Working Capital Finance Project finance Mining equipment finance Trade Finance

4. What is the nature of funding that is suited for mining activities? Alternative forms of accessing long-term finance. Issuance of corporate bonds, Joint venture partnerships, Royalty- based financing, Lines of credit Project finance Working capital facilities Bridging finance Acquisition finance Inventory financing Structured trade and commodity finance Empowerment financing

5. Are local Banks aligned to fund mining activities in Zimbabwe? Is there a mismatch between what banks can fund and the funding requirements by the mining sector? Structure of deposits Deposits from the mining sector Trend in deposits contribution Advances to the mining sector Local banks do not have capacity to meet the huge capital requirements of mining companies. Can this be addressed in the short-term? Any prospects in the long term? Difficult in the short- term. However in the long-run these are alternative ways of securing funding. Issuance of corporate bonds, Joint venture partnerships, Royalty- based financing, Lines of credit

6. What challenges do banks face in funding local mining activities? Deposit base Within the context of the multiple currency system, balance of payments developments remain a critical determinant of the expansion in the country’s banks’ deposit base (=liquidity) and domestic money supply at large. This situation is attributable to the fact that the country is only able to increase its liquidity (=deposits) through exports, diaspora remittances, foreign investments (including portfolio investments) and external lines of credit (including grants).

7. Policy Interventions The shadow of higher taxes, restrictive regulation and indigenisation looms large over an industry already grappling with the risks associated with falling international commodity prices. In short, Government interventions are:- Raising sector uncertainty and complexity, complicating decision making and heightening risks, Increasing risks for investors, making it harder to raise capital and affecting project viability The mining sector is strategic to the growth of the economy and has been identified as the cornerstone of growth. The intervention areas are: 1.National debt resolution 2.Investor/business friendly operating environment 3.Interest rates

8. Lines of credits available for the mining sector Country risk issues Availability Flexibility What needs to be done?

9. Syndication of facilities by banks “The lessons and risks” Syndicated Loan is a loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower. Syndication of facilities allow the sharing of credit risk between various financial institutions. Syndicated credit facilities tend to be of medium-term maturity (1 to 5 years) although facilities can be arranged for periods as short as three months and as long as 20 years. Different risk management structures. Different risk appetite Different interest rates. Incentives for syndication as a policy measure.

10. What can be done given the falling international prices? Commodity price risk management solutions Foreign exchange and interest rate hedging Financial engineering possibilities? Trading and hedging spot Forwards and swaps currency options structured products If traders want to protect themselves from the risk of future price fluctuations, they buy or sell positions in the futures markets.

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22. SOVEREIGN RATING

24. CONTACT DETAILS OF PRESENTER Robert Thomas Zawaira Group Corporate Strategy ZB Financial Holdings 1 st Floor, 21 Natal 21 Natal Road, Belgravia Harare Tel: +2638677002001