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"Tinkering" with laws could upset investors.

The success of Namibia's gold sector depends on the investment climate, political stability, and the ability of companies such as Helio Resource Corporation to access capital, says Richard Williams, CEO and director of Helio Resource.

Speaking to the Economist this week, Williams said that recently global perception of investment in Africa has been hurt by changes to tax regimes, political instability in countries such as Mali, and the under-performance of mining companies due to increasing costs because of poor infrastructure.

"Presently, the global investment psychology is risk-averse, which affects the ability for exploration companies to access capital to advance projects," Williams said.

The mining industry recently submitted a number of tax proposals to the Ministry of Finance, one of which suggests a common super tax on all commodities.

Last year, government tried to push tax reforms which would have increase the profit tax rate of non-mining companies from 37.5% to 44%. Government kept the rate at 37.5% amidst an outcry by the sector that the proposed changes would be too hefty. Other proposed changes to the tax regime included a 15% value added tax (VAT) on exports, as well as imposing a 5% export levy.

"The overriding factor for the allocation of exploration dollars is political, fiscal and legal stability. Tinkering with laws, increasing taxes and royalties and legal uncertainty all influence a company's decision as to where to spend the hard-to-raise exploration dollars. The world is a big place--and investments will go to the areas with the best returns on investment," Williams emphasised.

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Helio Resource Corporation owns the Gold Kop Target, Damara Gold Project (DGP) which comprises four licenses covering 318 500 hectares. These licenses include Etjo South, Okakango, Wilhelmstal and Otjimbojo. Helio holds a 100% interest in the project through its wholly-owned Namibian subsidiary, BAFEX Exploration. The DGP is located between AngloGold Asanti's Navachab Mine to the southwest and B2Gold's Otjikoto Project to the north-east.

Helio Resource started a drilling programme at the DGP project last month. However, no resource has been defined as yet.

"We believe the area has potential for Navachab style mineralisation. However, it is very early in the exploration project and a bit too early to be definitive. Navachab is an open pit mine. We will only be in a position to determine the style of mining (open pit versus underground) once (if) we have defined a resource," said Williams.

Previous drilling by the company during 2011 included the discovery of Navachab-style gold mineralisation at the Gold Kop Target. Drill testing over a 1.3km strike length intersected the following: massive sulphide zones up to 7m grading 9.0g/t Au, 4.4% Cu and 75g/t Ag; narrow high-grade quartz veins up to 1m grading 33g/t Au, as well as high-grade metasomatic replacements up to 2m grading 15g/t Au and 60g/t Ag.

By: Clemencia Jacobs

clemencia@economist.com.na
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Author:Jacobs, Clemencia
Publication:Namibia Economist (Windhoek, Namibia)
Date:Apr 20, 2012
Words:483
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