Could you introduce the EBRD and your reach?

In the years after the EBRD was founded in 1991, its initial focus was on CIS countries across central and eastern Europe and Central Asia. Later it expanded its focus, moving into Turkey, Mongolia, and, after the Arab Spring in 2012, to countries south and east of the Mediterranean Sea such as Morocco, Tunisia, Egypt, Jordan, and Lebanon. Across 36 economies of these regions, we invest annually more than US$14 billion, of which mining takes between US$300 and US$500 million across 10-12 projects. This allows us to create scale to mobilize internal specialist technical teams (engineering, technical, ESG) to provide expertise and support across these jurisdictions, and be able to take on more risk, including with early-stage projects. Just recently, we approved a framework for early-stage exploration projects for a total amount of US$150 million called JUMP ( Junior Mining Program). Our value-added is three-fold: One is the fact we act as a one-stop shop for all types of financial instruments, from equity to debt to hybrid finance. The second is that EBRD promotes green and inclusive investments and we can deploy technical assistance to promote these agendas within selected projects. And thirdly, EBRD is rated AAA, which denotes a robust ability to fund projects, a rare rating even among development banks. 

Could you elaborate on the criteria you use to select mining projects?

We use an internal framework that consists of six pillars to do the screening, with a bare minimum requirement that the project meets at least two of these: 1) competitive, 2) green, 3) inclusive, 4) integrated, 5) well-governed, and 6) resilient. As a bank, we naturally assess projects based on their market bankability. We also use 10 environmental pillars, available on our website. The mining projects we invest in are all Paris aligned and should adhere to the highest environmental and social standards.

How does the process go in terms of applications? Does the EBRD reach out to potential mining partners?

In most cases, EBRD will initiate discussions when an interesting project has caught our attention, and very often these discussions extend to a few years until the project matures, maintaining a close relationship during that period. Other times, we are approached by companies enquiring about financing. We do not work like a commercial bank where you can apply for a loan. 

Aya Gold is one of EBRD’s largest clients and a great success story. Could you share this story with our readers?

We met Aya Gold in 2013 when it was a small unfunded junior mining company. They were looking for US$9 million to develop their Zgounder asset into a small-scale production. Since they were looking for 100% of their market cap in finance, this was a struggle to approve internally, so in 2014 we came up with a very innovative win-win structure: a US$6 million loan plus royalty on the production and out of the money warrants, while US$3 million was raised in the stock market. Aya started producing and repaying the loan, their share price on the TSXV started to go up, the warrants gained value, and we began exercising those warrants, becoming a shareholder. Four years later, we reached record IRR and exited. Another four years pass and Aya’s market capitalization jumped from C$10 million to C$1 billion, an incredible achievement. Two years ago, we signed a US$100 million project financing and syndicated it to some local banks later on to help Aya achieve their dream of becoming the largest silver company in Africa, a dream turning into reality as we speak. Aya’s market cap is now C$2 billion. 

These are stories we want to remember. Thanks to EBRD’s tenacity, risk-taking, and guidance 10 years ago when no other financial institution wanted to provide the support needed. We provided the first US$6 million which triggered the rest. This case study illustrates how EBRD can act as a catalyst for project development since our stamp of approval influences others to also trust a promising mining project.

Lastly, could you tell us about EBRD’s strategy to expand to Sub-Saharan Africa?

The EBRD’s shareholders approved the expansion to six countries in the region, namely Benin, Cote d’Ivoire, Ghana, Nigeria, and Kenya and Senegal. Within this next expansion phase, the mining industry will be an important share of our investment portfolio.