Nurturing new mining ventures in Rwanda and throughout Africa.
BS: Pella Resources is an incubator and early-stage developer of natural resource projects in Africa. We find new and interesting ventures in the mineral resource space and are often the first investment in the project, which lends it credibility and confidence. After Pella Resources has completed its initial work, the project is opened to other investors to co-invest and develop it.
Pella Resources has projects that range from greenfield exploration to discovery, including pre-development, development and eventual production. We are involved in a whole range of minerals from diamonds, tin, iron ore, gold, copper, and rare earths to bauxite, for example. Pella Resources’ business model is to dilute ownership, as we progress through a project’s development stages so that we generally end up owning a minority share of the company. We currently own a significant number of shares in a wide range of projects. Ideally, we keep management control for as long as possible but are proud when companies such as Petra Diamonds grow and become an independent.
Pella Resources has secured 30-year mining licenses for the Musha and Ntunga areas in the prolific tin region in eastern Rwanda. Both areas were previously mined and there is significant potential for further exploration.
Pella Resources has a wealth of experience across the continent and in different minerals. What were your reasons for choosing to explore in Rwanda rather than in other African jurisdictions?
BS: As an African focused company, Pella Resources made a conscious decision to get involved in tin, just as we did a couple of years ago with rare earths in Burundi and bauxite in Guinea. We believe that over the next few years, tin will be a very attractive market and specifically targeted Rwanda, which is already a significant tin producer. This decision was also made because of the conflict in the Democratic Republic of Congo (DRC), where the other big tin deposits are located. Pella Resources was involved in a tender process for one of the tin projects in Rwanda and we signed the contract in September 2013 with the government. We have completed the preliminary work and will have our final mining license issued later this month.
Pella Resources’ agreement with the government of Rwanda is worth about $22 million and should be completed in five years. What can we expect from Pella Resources in this timeframe?
BS: Pella Resources plans to bring the mine into production by the end of 2014 or beginning of 2015. The initial stage of production will be from 3 metric tons (mt) of tailings and the waste from the previously mined areas. The initial investment will be between $7 million and $10 million and will ramp up, as we increase exploration on the primary ore bodies and grow production.
We will be constructing commercial scale facilities to process to a concentrate level and we will sell the concentrate to the smelters. Our plans are to add about 25% to the total tin production of Rwanda. Currently, Rwanda produces about 420 mt of cassiterite per month and we would like to add 100 to 120 mt to that production by the beginning of 2015 and grow from there. We should be spending around $20-22 million over the next five years.
Moving beyond Rwanda, which jurisdictions are most appealing to Pella Resources at this time?
BS: We like to work in jurisdictions with good governance and a reasonable amount of transparency. In many cases we have public investors and that leaves us with a large responsibility to invest that money in a good way. Therefore, being responsible investors, we need to look at jurisdictions that are stable with low risk; there are a few countries with unacceptable levels of instability and corruption, but otherwise we will look at most jurisdictions in Africa. Rwanda is one of the best.
We believe that Ethiopia will be a notable contributor to the African production of gold over the next couple of years and have a significant gold deposit there. We also have a copper projet in the DRC, a bauxite project in Guinea, a gold project in Senegal, Burkina Faso and Tanzania as well as a rare earth project in Burundi.
As the largest private investor in the mining sector in Rwanda, what is your assessment of the procedural aspect of operating in Rwanda?
BS: Rwanda has been a breath of fresh air. Every country has its challenges, but in Rwanda they are minor. The Rwanda Development Board acts as a one-stop shop, helping investors to get things done efficiently. It has been a good experience and one of the best I have had in Africa.
Rwanda does have some room to grow in terms of skills development and Pella Resources will be assisting with this. Initially, we will bring senior skills from abroad but we will work to change that. As a rule we have shadow programs to develop expertise by employing local staff to work alongside expatriates. We expect to employ about 150 to 200 people in the mines and approximately 20 people in senior positions. Initially 40% of management in country will be expatriates, but we will reduce that significantly by the end of the five years.
How does Pella Resources plan to mitigate any adverse effects and facilitate the uplifting of the local communities? Have you experienced any resilience in the communities in Rwanda?
BS: Artisanal mining has provided a livelihood for many Rwanda, even though it is illegal. Pella Resources seeks to create alternative employment in a sustainable fashion rather than in artisanal mining. It is a political and social problem and one can only be solved with the help of the local community and government.
We want to be viewed as a partner of choice in the countries and communities that we work in and give back in sustainable ways through schools, clinics, community centers, upliftment programs and child and adult education. Each project carries has a social responsibility to operate and contribute to the local communities in which we work.
The Pella Resources Group was founded and is supported by the Pouroulis family, who support many charities such as The Music for the Children Foundation and The Pouroulis Foundation.
The Rwandan government is making concerted efforts to promote other commodities. Do you believe that international investors are aware of the opportunities available in Rwanda and would Pella Resources be open to looking at other investment endeavors?
BS: Few people understand that Rwanda is a great jurisdiction. Many people think of genocide and fail to realize that the country has come a long way since then. Rwanda is one of the best turnaround stories in Africa. People need to come to Rwanda to appreciate how good the country really is. Rwanda does not have the same riches as the DRC but it is managing its resources well and need help to expand the industry. The Minister is committed to growing the mining industry.
Pella Resources is open to looking at other investment opportunities in Rwanda. We have commit-ted to the government to start looking at new projects after the tin project has launched.
This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Second Official Mining in Africa Country Investment Guide, will be launched next February 2015, as the only official publication providing country-specific information at Africa’s top mining event, the 2015 Investing in Africa Mining Indaba™ held in Cape Town, South Africa. You can view the 2014 Official Mining in Africa Country Investment Guide here