Project Overview
Convinced by rising international prices for certain mineral commodities, an Australia private equity firm decided to invest in a Sierra Leonean mining concession.
Sector
Mining
Background
The lure of profit
Sierra Leone had always been a major attraction for companies looking for opportunities in Africa’s mining sector. Our client, an Australian private equity firm was one such entity that had received an attractive offer to buy into an old mining concession for a commodity whose price was on the rise. Our work was to vet the the concession and its promoters before money changed hands.
Findings
The devil is in the details
One of our first ports of call was the National Minerals Agency which licenses mineral rights and maintains a repository of active rights in the country. The NMA listed the concession in question as being actively licensed to the company of interest. The details supplied such as the location and area covered by the concession and all seemed to be in order.
In the interest of being thorough however we escalated enquiries to the Ministry of Mines and Minerals, which oversees all mining activities and subsidiary agencies such as the NMA.
We were discretely informed that the license in question was on a list of mining licenses to be revoked due to non-performance on the part of the concessionaires. This list had not yet been made public but the decision was to be final. The implication was that anyone who bought into such concessions or rights might be buying into a concession that would soon be revoked.
As a result of this information, the client decided not to proceed with the acquisition. Three months later, a list of revoked licenses was published by the NMA and Ministry of Mines and Minerals, which included the concession in question.