Africa’s rich bounty of mineral resources continues to draw interest from across the world, with companies from the likes of China, the UK and Australia active on the continent.

However, MineAfrica VP Wayne Floreani tells Mining Weekly that Canada remains the largest non-African mining investor in Africa.

“There are about 175 TSX-listed mining companies active in Africa who raised C$1-billion in equity in 2011 for 628 projects in Africa. For the ten months ending in October 2012 C$703-million in equity was raised,” says Floreani.

“Africa’s geological wealth, coupled with improving investment conditions in a number of countries that have been historically underexplored, are the main factors driving Canadian interest. The lower costs, potentially higher returns and the shorter lead-time to production are also important factors,” he notes.

MineAfrica is a business development and marketing company providing a platform for mining companies, advisers to the mining industry, service providers and governments to promote themselves to a senior level, Africa-focused audience of financial institutions, analysts, mining executives and media.

As to the challenges related to investment in Africa, including its economic powerhouse South Africa, Floreani explains that investing in any country is a complex business decision.

“The investor weighs the risk factors (such as political instability, resource nationalism, mineral regimes, taxation and crime), exploration and development costs (such as infrastructure), global economic conditions (such as commodity prices) and many other less explicit risk factors, including the labour pool and its skill set and the estimated time to production against the eventual value of the geological deposit, which will all contribute to a determination of the economic viability of the project.

“Projects are evaluated and compared and the decision made to invest or not. Many of these risk factors are currently prevalent in South Africa and, as a result, we have seen South Africa drop in recent years in the Fraser Institute ‘Annual Survey of Mining Companies’.

“At the end of the day it is simply a risk/return exercise and the project with the least perceived risk and the highest expected return will be the project that will be moved forward,” says Floreani.

“Despite that, the recent listing of Ivanplats on the Toronto Stock Exchange for C$300-million for its South African and Congolese projects, is an encouraging sign that companies are willing to work around these issues given attractive-enough projects,” says Floreani.

“Platinum Group-Metals is another example of a successful company still being able to raise capital – it has just raised C$180-million to further its near-surface and low-cost platinum projects.”

Floreani reports that Canadian miners are active all over the world. They have a healthy appetite for risk, they are experienced and supported by strong financial and service sectors, believe in good governance and good corporate social responsibility (CSR) and Canada has a government that is committed to, and promotes, the fundamental principles of CSR.

In January, Canadian Prime Minister Stephen Harper announced further support to help African countries manage their natural resources responsibly and transparently, which will contribute to sustainable economic development.

“The development of mining, oil and gas resources in Africa is critical to the future prosperity of the continent,” said Harper. “The support announced today will help African countries manage their natural resources responsibly and transparently with a view to accelerating sustainable economic growth, creating jobs and reducing poverty.”

Through the United Nations Economic Commission for Africa, Canada is providing support to the African Mineral Development Centre, which will deliver guidance and policy advice to African countries on how to manage their extractive sectors responsibly and transparently. The centre will also provide a forum focused on generating innovative approaches to increase the contribution of this sector to poverty reduction in Africa, resulting in positive development impacts.

Visit MineAfrica at PDAC 2013 at booths #436, #437, #438 and #439.