North River Share Discussion Threads

[carter1110] 04/8/2016 21:26

Excellent post Steve and yes I too, still believe !!!

[steve239] 04/8/2016 20:13

Four weeks ago Rod Beddows stated during the conference call that if the resolution was passed, he would be purchasing shares in the company, demonstrating his belief in the future of the project. I can’t see any evidence of recent director purchases, so what has changed? Is he waiting for the share price to fall further, as the other directors did before buying last year?

The share price of the most recent sales today was equivalent to 0.045p in “old money.” Like many others I paid, on average, between 15 and 20 times that much per share and can’t understand for the life of me why the selling still outweighs the buying at this price, with people prepared to virtually give away their shares in the hope of re-investing their remaining £2.50 elsewhere. Despite the never-ending delays, it has to be an odds-on shot that this project will eventually take off before it’s too late and that the share price will at some future stage be several multiples of the current level. Maybe I’m a born gambler but if I had been watching on the sidelines for the last year or two without already investing much of my life savings here, I would be buying a sackful at these prices, as the likely upside is so much bigger than the downside. It would be helpful if the directors would show a bit of support by opening their wallets and letting the market know that they had done so.

As for the licensing process, the failure of the ministry to formally respond within the stated timeframe is “a tad disappointing” (huge understatement) but we do at least know from the recent dial-in that James Beams is having confidential ongoing discussions with the ministry. So the delay is frustrating but doesn’t necessarily imply a Mexican standoff.

Come on, chaps. We’ve already spent at least £10 million on exploration that has cost you nothing. Give us a mining licence and we’ll construct a mine at no cost to you, employ a few hundred Namibian citizens and pay you 30-40% tax on our profits. Surely you can’t ask for more than that (???)

[yellowthroat] 02/8/2016 10:07

Cruncher, could be part of the big response from business & the final consultation period that they reference?Final rules more sensible & then binding?Lots of pressure on govt & ministry to get it right ? Eg balanced !Company must be working on ministry final response timeframe inquiries?V frustrating all the same & seems typical with this saga !Particularly as saw Zinc go over $2250 & Silver is still over $20.50 ish North River could be on larger firms radar ? Zinc getting hot.For me I want to see this JORC upgrade which is late ish as well don't forget!YT

[crunch123] 02/8/2016 07:12

So a month after the Ministry's supposed advised date for it to respond to the licence proposal . . . and still no RNS.

[yellowthroat] 31/7/2016 18:24

O/T Just been reading this week about Owen Smith's and Corbyn's adventures in LA-LA Land. Smith on not lowering business taxes and 15% wealth tax. Re-visiting Brexit and 50% tax rate returned. Noticed one quip, "more spending on NHS - If he has any money from aforementioned!" - D Smith Sunday Times

Corbyn. " Ban special forces missions behind enemy lines " - FFS

Give me strength. Clueless Namibia and the left !

YT

[yellowthroat] 31/7/2016 18:20

It was furthermore argued from the floor that more weight should be given to skills development and training of disadvantaged communities, instead of concentrating on mandatory requirements of ownership and management.
Other issues of concern raised are what effect this Bill will have on one-man businesses and private property rights. Concerns were also raised that empowerment policies such as this Bill may not bring about poverty eradication at all, but rather lead to the failure of the country’s economy.

-------------

"Cart before horse"

This is now a serious issue and doesn't get presented or go through till september and could be subject to legal challenge.

Country risk just went up. FFS

However there was an earlier bit about "selling up to 25%". NRRP has been looking for investors other than GS for ages.

$27mn for Phase Three should just about do it !

Seriously though, what experienced Namib PDP's are these ? As alot of them are below standard allegedly. Some of River's experiences havent been great already.

F me this issue is a big one, the election has been disastrous!

YT

[yellowthroat] 29/7/2016 16:21

I can't view it at moment ?

My question would be Mining Ministry rules or PMs rules ?

Steve's one implied further consultations & possible for PM to back off a bit on submissions ?

YT

[1mack] 29/7/2016 15:30

I just got a few more. only 500 quids worth but price attractive

[crunch123] 29/7/2016 15:01

There's another article in the same paper saying that the government isn't going to back down on the NEEEF legislation.

hxxp://www.namibiansun.com/local-news/govt-bullish-over-neeef.95540

As Eben de Klerk of ISG Risk Services puts it, the legislation "will no doubt cripple Namibia’s economy.”

It's been a very expensive lesson.

[nufcrichard] 29/7/2016 14:41

yep crunch, the consolidation seems to have helped the price fall even further.
I guess the comin 5p party won't be quite the one we envisaged a few years ago.

[yellowthroat] 29/7/2016 14:18

Try thishxxp://www.namibiansun.com/economics/fallout-over-neeef-growing.101628YT

[yellowthroat] 29/7/2016 14:16

I'm only on I-phone at moment but there is good article on NamibianSun.com about NEEEF fallout from business.Big angry reaction growing with some firms threatening to go offshore & exploring rules or quitting ! Worth a read !YT

[crunch123] 29/7/2016 14:03

Meantime the share price continues to plummet - last trade was @ 12p (which equates to 0.048p in pre-consolidation terms.
The open offer earlier this month was at 23.75p.

The offer doc said NMoM&E said they'd respond to NR's licence proposals by 2nd July.
Presumably they haven't (I remember a comment from one of the Ministry bods in an article last autumn saying "there's no delay in issuing licences"), must be really frustrating for James Beams, along with everyone else in, or invested in NR, but shouldn't we get some sort of update e given the stated ministry response date of 2nd July in the RNS?

It will be interesting (academically) to see where Namibia ranks in the next Forbes list of best African countries to do business in - they were 4th in the most recent one.

[yellowthroat] 29/7/2016 13:20

Trying this : hxxps://t.co/n9QEglPiX5YT

[yellowthroat] 29/7/2016 12:45

Strong growth in view of retro punishments & affect of further FDI ? Think this 'growth' outlook might change fairly soon !Curtailing of activity or non expansion of investment more like ?RegardsYT

[crunch123] 29/7/2016 10:37

According to the Bank of Namibia's economic outlook: "strong growth is expected from the metal ores mining (copper, gold and zinc). . . over the medium term from 2017 onward, GDP growth will be supported by expansion in mining output from new and existing mines."

Growth could be stronger if . . .

[steve239] 28/7/2016 09:43

From a recent RNS:

“The Notice of Preparedness (to grant a mining licence) contains a number of supplementary terms and conditions relating to matters including, inter alia, the work programme, production, environment and Namibian participation in the Project that will apply to the mining licence…

…If enacted, the (NEEEF) Draft Bill will set out obligations for companies, irrespective of sector, in respect of, inter alia, ownership and management participation by previously disadvantaged Namibians. Certain obligations under the Draft Bill are inconsistent with those laid down under the Supplementary Conditions to the Notice.”


From my perspective, the “unknowns̶1; are as follows:

1. Whether the draft bill will become legislation IN ITS CURRENT FORM. This seems highly unlikely, given the powerful opposition to the bill from business organisations throughout Namibia and the potential threat of legal action from the National Employers Federation. The only backing seems to be from the Namibian unions, who are largely responsible for the instigation of this bill.

2. Whether the draft bill will become legislation IN ANY FORM.

3. How proposed partial Namibian ownership of companies would be brought about. This is unclear but all the rhetoric seems to imply that any shares for Namibians would be acquired through financial transactions as opposed to free transfer. The other aspect of this is the timing of any transactions (ie immediate or in stages), as the valuation of those shares could differ enormously depending on the time of purchase.

4. Should the bill go ahead, whether NRRP is in any position to negotiate the terms of the licence, based on the fact that the application was made well over 2 years ago. But if the bill was to be applied retrospectively to all business organisations regardless of their stage of development, then presumably there would be little room for negotiation.


The key is obviously to get all of this sorted and the licence awarded before the next fundraise is required. The company indicated in the recent “dial-in”; that the licence is expected during the next few months (although we’ve heard that before) and that it has the flexibility to extend the need for further funding well into next year if necessary.

[yellowthroat] 28/7/2016 00:55

The proposals by the mining ministry are different to the Prime Ministers ones & hence this is where the conflict arises, that I understand?The PM has overridden the terms originally decreed & therefore the confusion for companies is that they don't know whether to accept Mining Ministries rules (which we generally do) over the alleged extra rules that impose over the top from PM.It says this in RNS, mining ministry says nothing about taking stake whereas company infers PM is not clear?Anyway this is the apparent confusion!PM office is where carp is coming from !YT

[1mack] 27/7/2016 22:29

Have faith, alot of the old aim stocks arw popping up. i.e. sirius and sound energy (oil).

We could very well be next!

Good find chaps with recent info. This dam license will make or destroy us!

GLA

[crunch123] 27/7/2016 22:19

Steve, that's a really perceptive observation of the neef proposals.
Whilst I haven't looked to see who the 'economic association of Namibia' is (presume it's a business association?) it seems to capture many of the issues.

There's no doubt that the disadvantaged Namibians need help and its laudable that the government is trying to do this . . . but . . .
I would hazard a guess that the ministry is hearing from a number of foreign companies (with a broad spread of geographical investments) that they will concentrate on investments elsewhere in future.

Those foreign companies without sufficient - or any - diversification, such as NR, have been put in a really difficult position by circumstances totally out of their control with the goalposts being dramatically changed long after they started pumping money into the Namibian economy.

[steve239] 26/7/2016 19:13

For anyone interested, this is the full response (dated 29 April 2016) of the Economic Association of Namibia to the draft NEEEF bill. There is no suggestion anywhere of free shares being issued to Namibians – only talk of private investment and loans to Namibians from banks and financial institutions.



New Equitable Economic Empowerment Framework and Bill Analysis and Response Submitted by the Economic Association of Namibia to the Office of the Prime Minister and the Law Reform and Development Committee 29 April 2016.

Contents • Motivation • Evidence-based interventions • General observations • Analysis of Current Pillars • Potential Economic Impact • Alternative Proposals


Motivation of the NEEEF

It is undeniable that considerable poverty and inequality of wealth and income persists in Namibia. • We agree that, as stated in the introduction to the NEEEF document, the creation of an equitable and socially just society is of paramount importance to Namibia. We believe this is necessary to ensure economic and social stability and development. • However, having analysed the proposals made in the NEEEF document and the draft NEEE Bill, the EAN feels that the NEEEF in its current form is unlikely to achieve these important goals. • With this in mind, and in response to the call for comments, queries and inputs from the public, the EAN has put together the following.

Evidence-based interventions

It would strengthen the cause of the NEEEF and NEEE Bill if some statistics are provided – Regarding the current ownership structure of businesses by size (number of employees) and by sector (mining, manufacturing etc.) in order to analyse the current situation and to target interventions. – Regarding the management structure of companies by size and sector based on information available with the Employment Equity Commission. • An analysis of the changes in the composition of management in businesses since gazetting the Affirmative Action Act of 1998 would inform intended interventions.

General observations

It is important to grow the economy in order to open new opportunities for entrepreneurs and employees and thus increase the participation of disadvantage persons in the economy. • Growing the economy requires financial resources that might not be sufficiently available if financial institutions provide primarily funding for new ownership structures of existing businesses. • Investment in quality education at all levels is a fundamental enabler for empowerment. • The NEEE Bill deviates substantially from the NEEE Framework in that there is less emphasis on equity and empowerment and in the narrowing down of the group of beneficiaries.

Economic Ownership Pillar

In general, ownership is a fundamental pillar of a market-based economy and any prescription concerning the ownership structure could have negative impacts on the economy, the competitiveness of the country and its attractiveness to domestic and foreign investment. • Ownership forms a key component of the prescriptions of the NEEEF, but real empowerment should go further than being a shareholder – Employee shareholding should be explored further and a clear awareness and education strategy should be designed to inform employees about the pros and cons of such an initiative. – In order to spread wealth more widely, it should be considered to limit the number of shareholdings individuals and companies can take up. – Shareholders may end up sharing in profits, but they may also have to invest further in the company, absorb losses or even lose their entire investment – It is uncertain whether ordinary Namibians, many of them first-time investors of limited means, will be able and willing to bear this risk • The NEEEF also requires that new, previously disadvantaged shareholders may only sell their stake to previously disadvantaged Namibians – This is likely to reduce the value of the share when sold on, by reducing the pool of potential buyers – The creation of two classes of shares (i.e. previously disadvantaged and otherwise) could lead to a parallel market and rent-seeking behaviour to incorporate the perceived price difference – The need to clear transactions for NEEEF compliance could seriously inhibit the smooth operation of the NSX.

Economic Ownership Pillar

A further logistical issue arises in the valuation process before ownership is restructured: – Valuing a privately owned firm may be difficult and costly, particularly for small enterprises and one-person professional businesses (lawyers, medical practitioners. Consultants, etc.) – The NEEEF and NEEE Bill do not prescribe a specific method of arriving at a fair valuation, and incumbent owners may be unwilling to sell their stake at a valuation they perceive as unfair • The ownership pillar in its current form applies to all businesses (with the possible short-term exception of existing firms that do not require public tenders or permits). This may prove problematic in certain cases: – Sole proprietorships cannot easily divide their ownership – Certain business structures require owners to obtain certain professional qualifications (e.g. legal practices, medical practices).

Management Control and Employment Equity Pillar

A similar issue may arise as in the ownership pillar, with small enterprises lacking an easily separable management structure. The owner of micro and small businesses is often the only ‘manager’; and outsources functions (s)he cannot fulfil, such as accounting. – This may necessitate costly organisational restructuring, and could deter the setting up of new enterprises • In order to push for a broad-based empowerment that benefits as many persons as possible, limits on multiple board memberships held by one person would be necessary. This is currently contemplated by the Ministry of Public Enterprises for board memberships of SOEs. • A skills shortage remains an issue at the managerial level: – Training effective managers takes time and is often accomplished over many years of experience, making it difficult to achieve swift transformation in this pillar – In this regard, it is likely to be very difficult to detect fronting behaviour, as opposed to genuine managerial involvement.

Human Resources and Skills Development Pillar

Human resource development and training is a fundamental pillar of empowerment. To be successful it requires close cooperation and coordination between the private and public (education) sectors. These aspects have not received sufficient attention in the framework and bill. • The human resources pillar focuses on the criterion of money spent on training: – This does not necessarily guarantee effective skills development, and an alternate focus in this regard would be on the quality of training, the number of individuals trained and the suitability of their skills acquired • The criteria for this pillar relate to percentages of wage bill spent on training: – This could have the unintended consequence that firms reduce their wage bill, via retrenchments or slower wage growth, in order to comply • Smaller businesses, which can least afford to be locked out of government tenders, will find it more difficult to comply with this mandatory pillar, as they frequently lack the capacity and structures to offer formal training • New enterprises usually struggle the first few years to make ends meet. Any additional costs will make it even harder to break even.

Entrepreneurship Development and Marketing Pillar

The idea of mentorship raised in this pillar is a good one: – Close coordination will be needed, however, between government and industry to implement this proposal effectively – Lessons can be learned from existing mentorship schemes in the agricultural sector between established and emerging commercial farmers as well as from existing schemes initiated by private companies. • In terms of procurement, regulations for the firms to benefit will need to be rigorously constructed, in order to combat a proliferation of “middlemanR21; companies – In this aspect, lessons can be drawn on from past public procurement issues • Procurement requirement need to be industry and sometimes even company specific since the operations of a business determine the inputs required and the sources for these inputs.

Corporate Social Responsibility Pillar

This pillar is also an important aspect of a broad-based empowerment policy. However, it needs to be ensured that CSR spending is not concentrated on a few locations and or a few activities. Furthermore, it needs to be ensured that rural and urban poor communities benefit. • The specifics of the pillar could be better refined to encourage the most beneficial kinds of CSR spending and to ensure CSR projects achieve a national coverage. • Similarly to the human resources pillar, criteria would benefit from a closer link to outcomes rather than focusing on monetary inputs. • Furthermore, similar to the human resource pillar as well, it needs to be ensured that it does not result in additional cost pressure in particular for micro, small and medium-sized or new companies.

Value Addition, Technology and Innovation Pillar

This pillar seems to overlap in its purpose with the upcoming export levy, and as such is likely to apply mostly to firms in the primary industries – This pillar should include the level of detail incorporated by that levy, making judicious use of exemptions in cases where beneficiation destroys value (some fresh fish), is illegal (uranium), or economically not viable since Namibia does not produce the required volumes.

Financing the NEEEF

The financing needs to achieve wholesale economic restructuring as proposed in the NEEEF are very substantial. • In this respect, an overly hasty transformation could have destabilising effects on the macro-economy, namely: – Considerable risks associated with bringing first-time borrowers into the financial markets would be borne either by private banks or by the Development Finance Institutions that are mainly Government owned – A significant proportion of the loanable funds of the Namibian economy could be diverted into empowerment transactions, inhibiting other new investments that lay the foundations for economic growth.

Potential Economic Impact: Investment

The NEEEF in its current form could lead to a slowdown in formation of new businesses in Namibia, as new companies may struggle to be NEEEF compliant – This runs contrary to government’s NDP4 objective to improve Namibia’s ease of doing business. Namibia already ranks poorly on number of days required to open a new business (ranked 179th out of 189 countries by the World Bank) • Moreover, NEEEF proposes to channel significant funding into empowerment transactions for existing businesses, thus shrinking the pool of investable funds available to new enterprises. This is likely to make it at least more costly to start a business or in the worst case no financial resources are left to finance new, riskier undertakings.

Potential Economic Impact: Investment

The ownership pillar of NEEEF suggests entrepreneurs will earn less reward for their efforts, which is likely to reduce the number of new businesses launched: – Previously disadvantaged entrepreneurs will have to accept a lower price when selling their shares, as they will only be allowed to sell to a limited market of previously disadvantaged Namibian buyers – Previously advantaged entrepreneurs may have to forfeit a large share of their profits to a new part owner who did not contribute to past growth of the business – and did not share the risks of establishing the business – and might not even contribute to further the business beyond acquiring a financial share. • Inward foreign direct investment is likely to fall, as investors would have to forfeit at least 25% of their profits to become NEEEF compliant. Some investment opportunities that were marginally profitable before NEEEF will not be worthwhile after it takes effect.

Potential Economic Impact: Investment Climate

Investors require a certain amount of policy certainty before they will invest, and Namibia has traditionally benefited from her reputation for political stability and policy predictability • The NEEE Bill would put this reputation at risk, particularly due to features such as: – The severity of the punishments for fronting, given the relatively vague definition of fronting practices – The open-ended provision for Ministers to decide on the mandatory ownership share in their respective sectors • Anecdotal evidence suggests that some inward investment has already been postponed due to uncertainty in recent months over the form that the NEEE Bill will take.

Potential Economic Impact: Balance of Payments

The potential drop in inward investment to Namibia would worsen the balance of payments deficit – In recent years the large trade deficit, whereby imports have exceeded exports, has been offset somewhat by strong inward capital flows – If inward investment slows, the trade deficit could cause foreign reserves to diminish even faster than has been observed in the past few months, risking an eventual balance of payments crisis • As the NEEEF would also close off certain investment avenues for previously advantaged Namibians including those who have sold shares in their business to previously disadvantaged Namibians, it could accelerate capital outflows as these individuals choose to invest their capital abroad.

Potential Economic Impacts: Growth

Lower inward investment and slower business formation would reduce the GDP growth rate in the medium- and long-term • Since the focus of NEEEF and the NEEE Bill is on existing businesses, it could well affect the diversification and innovation of the economy with detrimental consequences for growth and employment creation • While GDP growth is recognised to be a secondary goal in respect to the NEEEF, lower growth also implies weaker growth in government revenue, which is crucial to the provision of public services which are helping to reduce inequality of living standards.

Potential Economic Impacts: Inequality

Previous and current empowerment policies have tended to fall into a similar trap, whereby an elite cadre of middle persons and dealmakers are given an opportunity to enrich themselves further, with little or no benefit to the majority of ordinary Namibians. – This effect is evident at present in large infrastructure projects and other operations when foreign companies partner with Namibian nationals without their true participation in the operations, without skills and knowledge transfers and hence without real empowerment • The structure of the NEEEF leaves it as open to such window-dressing as previous policies, in spite of the strongly worded rhetoric and harsh disciplinary measures contained in the NEEE Bill. – Those to benefit from empowerment via NEEEF need only fit a broad definition of race, gender or disability, without any regard as to wealth accumulated in recent decades. “Previously disadvantaged” does not always equal “currently disadvantaged”, but the NEEEF in its current form would make these definitions interchangeable in a legal sense. – The NEEE Bill narrowed the beneficiaries down to previously racially disadvantaged, thereby excluding the other two categories stipulated in the Namibian Constitution, namely women and people living with disabilities.

Potential Economic Impacts: Inequality

It is proposed that banks will have to devote at least 3% of non-retail funding to empowerment transactions. This provision will be vulnerable to how empowerment transactions are defined, and loose definitions may give rise to empowerment in name only: – Since the NEEEF draws no distinction between members of the post-Independence business elite and those still suffering deprivation, banks could achieve compliance by scaling up lending to the former group (who in any case would be more creditworthy than those who are truly disadvantaged) • Similarly, the ownership and management pillars risk giving rise to such a concentration of empowerment deals in a few hands: – Established firms are more likely to cherry-pick the most experienced and knowledgeable board members and managers who fit the definition of “previously disadvantaged”, without including the majority of marginalised Namibians.

Potential Economic Impacts: Financial Stability

The prescriptions of the NEEEF with regard to funding the economic transformation assume a major role to be played by private banks • Absent of any means to compel these banks to finance broad-based empowerment transactions, they are likely to lend primarily to wealthier, already-established previously disadvantaged Namibians • This suggests that the riskier and less secured empowerment loans will have to be provided by the state-owned financial institutions, DBN and SME Bank. This could have negative consequences on the balance sheets of these institutions, necessitating future public bailouts • On the other hand, compelling commercial financial institutions to engage in more riskier lending might result in violations of supervisory regulations set by the supervisory authorities (Bank of Namibia and Namibia Financial Institutions Supervisory Authority) and in failing stress tests.

Alternative Proposals

Above all, there is a need for genuine cooperation between the private sector and government, over and above consultation such as is underway at the moment • In the ownership pillar, community shareholding schemes could be explored, as well as employee share schemes for those enterprises that are large and stable enough to support them and that are unlikely to close with resulting loss of employees’ shareholding capital. • As touched on in the NEEEF document, varied approaches will be required in different sectors, and this is an idea that must be pursued further, as opposed to broad prescriptions across the economy. Hence the Framework needs to provide sufficient space for sectoral flexibility.

Alternative Proposals

Lessons need to be taken on board from the experiences of countries in the region, such as South Africa and Zimbabwe, on how empowerment policies should not work: – Namibia can avoid the mistakes that have seen other countries eventually roll back unsuccessful empowerment initiatives • Ultimately, however, sustainable empowerment has to occur through education and skills transfer: – This should focus on quality outcomes, rather than monetary inputs – The idea of mentorship enlisting experienced and/or retired professionals could be considered – More emphasis could to be placed on internship and apprenticeship programmes.

The Way Forward

The Economic Association of Namibia is committed to the ideal of an equitable society that the NEEEF aspires to create. • We very much welcome the openness to consultation that government has shown in the process of drafting the NEEEF, and our door is open to offer: – Impartial economic research (specific or general) to inform final policies in this area – Public fora at which to discuss the NEEEF proposals – Any other inputs into the policymaking process Economic Association of Namibia PO Box 6148 Windhoek M: [phone] F: [phone] E: [e-mail]

[yellowthroat] 26/7/2016 12:59

Sensible politicians it should be ringing alarm bells for, Cruncher. We hear enough about balance of payments & capital account rhetoric in UK ?Where's the overseas income or investment to balance out deficits ? Plunging rapidly ?Where are the govt economists?Hopefully the company is still making these arguments continuously or now at least even some of the directors monies might go down plug hole ?Not too much mind tho I'll bet. Hey HoYT

[moreminer] 26/7/2016 11:39

Good article Crunch,

So in just a few years Namibia as country will sort of have been shut down.
They are in the danger zone now and with the current legislation we do not see any new investments coming in.
What an waste. It seemed a safe country, but with these politics the Namibians will not be the winners.
Maybe just a few, but not the people. MM