MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto Stéphane Brabant, Partner, Herbert Smith Paris LLP 8 March 2011 Strategies for achieving "Bankability" for mining projects in Francophone West Africa

_1 2  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…

_1 3 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

_1 4 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)

_1 5 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

_1 6 Appendices

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8 A continent of cultural and legal diversity Like the rest of the world, Africa is a continent of diversity... …with different influences and languages Francophone countries Spanish and Portuguese speaking countries English speaking countries Arabic / 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

_1 9 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 principles Mixed civil law / common law based systems Two legal systems in Africa (sometimes complemented by Islamic law or customary law) NATIONAL LEGAL SYSTEMS Common law and civil law traditions

_1 10 DIVIDENDS DEPOSIT MINING COMPANY HOST STATE EXECUTIVE LEGISLATIVE JUDICIARY PRIVATE HOST COUNTRY HOST STATE’S LEGAL SYSTEM BANK ACCOUNT OFFTAKER MINING/OIL AGREEMENTS EXPLOITATION PERMITS PRIVATE LAW (SUB) CONTRACTOR WARRANTIES SALE $ EXPLORATION PERMITS OFFSHORE $ $ EPC $ BANKS $ LOAN HEDGE PROVIDER $ HEDGE AGREEMENT INTERNATIONAL MINING/OIL COMPANY DIVIDENDS ECAs ADMINISTRATIVE LAW COURTS ADMINIS- TRATIVE COURTS What does a lawyer see when he looks at a natural resource project? Necessity for legal clarity where there is factual complexity BANK ACCOUNT