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TABLE OF CONTENTS Mar 11 - 17, 2013 Volume 99 Number 4 - 0 comments

'This is the beginning of the African decade,' Friedland says

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Shares of Ivanplats (IVP-T) began trading on the Toronto Stock Exchange in October 2012, but the company, founded by mining entrepreneur Robert Friedland, has been exploring in Africa since 1994. Today Ivanplats has discoveries and development projects covering copper and zinc-copper in the Central African Copper Belt in the Democratic Republic of the Congo, and platinum-group metals, gold, nickel and copper in South Africa’s Bushveld complex. Friedland spoke about Africa’s immense potential at a breakfast meeting organized by the Canada-Southern Africa Chamber of Business and MineAfrica at the Prospectors and Developers Association of Canada conference on March 5.

Robert Friedland: “Africa is definitely open for business. It is an exciting part of the world to be working in, and there is incredibly large potential to make money. And what’s more, when you go to Africa to invest, and when you work in Africa, you are becoming part of an astonishing success story. I have been working on the African continent for decades. I was there before the great liberation movement achieved historical change in South Africa, and it’s even greater to make history than it is to make money, and I can truly tell you — I can truly tell you — that there has never been a better time to invest in the African continent than today.

If you think back to just more than, say, 10 years ago, there was conflict and wars raging all over the continent. Now, particularly in southern Africa, there is relative peace. The conflicts in Angola, where my brother was in the diamond industry, in Zimbabwe, in Burundi and in the Great Lakes region, generally have either disappeared or there has been a lot of progress in bringing back peace.

At this point, I really need to quote the new chairperson of the African Union Commission, Dr. Nkosazana Dlamini-Zuma, who was addressing the African heads of state in Addis Ababa a few weeks ago, and I have her quote, she said: “Close to 90% of countries in Africa have enjoyed sustained peace and stability during the last decade, and they continue to do so.”

At the same time, the continent is continually strengthening its capacity to deal with conflicts, and with that relative calm have come really important opportunities for business, for development and for economic growth to the benefit of both Canadian and international investors, and more importantly, to the local countries and communities in which these assets are located.

If I can quote Dr. Nkosazana Dlamini-Zuma again, from the same speech she delivered just a few weeks ago, she said: “The African continent is endowed with rich natural resources, including mineral and marine resources, as well as vast, arable land. These are critical components in the industrial and agricultural development processes that should drive economic growth, trade and social transformation.”

And so with that, I want to show you a little bit from our true depth of new ideas. To give you an idea of how we really see this: In 1970, 39 million people lived in megacities, if we define megacities as cities with over 10 million people. There were only two megacities in 1970: New York and Tokyo. By 2011, 359 million people, or roughly 10% of the world’s urban population, lived in 23 megacities, cities with over 10 million people. By 2025, which is tomorrow morning in geologic time, and at the scale at which we invest in mining, 630 million people, or 14% of the world’s urban population, and 8% of all the people walking on this planet, will live in 37 megacities. The 12 largest are: Tokyo, New Delhi, Shanghai, Mumbai, Mexico City, the New York City area, Sao Paulo, Dhaka, Beijing, Karachi, Lagos and Calcutta. And when you build those megacities you need the resources of southern Africa. And as you build those cities, not only are they wildly consumptive of copper and steel and iron and molybdenum, but look at the air. And if you want to clean that air, the environmental metals are copper, platinum and palladium. If you want to have a hybrid car, if you want to have an electric car, if you want to have solar, or wind or tide — whatever energy method you want — you need copper, and if you are going to burn hydrocarbon, you need platinum and palladium. Recently, the air in Beijing, one of the megacities, was so diabolically bad that the Chinese government has decided to really do something about it, and the solution rests with platinum and palladium.

It was just two years ago for the first time in human history that the number of people living in cities exceeded the number of people living in rural environments. The whole planet Earth is going urban, and urbanization needs the resources of southern Africa.

The middle class is being reordered. In the current period of time, it’s the Europeans living in a big Disneyland, where everything has already been built, or in the U.S. But in our lifetime the middle class is shifting to India, China, Indonesia, Vietnam, Cambodia and Laos — all kinds of countries. And the middle class will also grow in Africa. So we’re moving an enormous number of people into an economy where everyone can enjoy a dignified and successful life.

The Economist magazine came out with this amazing issue on aspiring Africa, and that chart of upward movement is in the neck of that giraffe. Africa is the place to go. You know, you have an enormous amount of development in Africa . . . according to T. Rowe Price and the World Bank, Ethiopia, Mozambique, Tanzania, the Democratic Republic of the Congo, Ghana, Zambia and Nigeria will be seven of the top-10 gross domestic product (GDP) growers on this planet in the next 10 years. This is the beginning of the African decade.

Why is this happening? Well, first of all, we have almost no GDP growth in the U.S. Maybe we could achieve 1% or 2%, and there is no GDP growth in the European continent, maybe 1%, maybe minus 1%. But sub-Saharan Africa is growing at about 5.6% per year, when you take all of sub-Saharan Africa. So everybody knows that East Asia and the Pacific is dynamic, but sub-Saharan Africa already ranks ahead of Latin America and the Caribbean, ahead of Europe, ahead of north Africa, and of course, the U.S. and Europe are far behind.

So if you’re looking for a place that is growing, if you’re looking for a place where there is a dynamic future, it’s got to be the southern part of Africa. Investors have now started a new scramble for Africa. If you just read The Financial Times, global inflows of capital to Africa are at a two-year peak. And this meeting here in Canada — after all, we are something like a mecca for the global mining industry — this meeting is part of that process of enormous capital flows going to southern Africa.

No less an authority than Christine Lagarde, who is the head of the International Monetary Fund, has said that “sub-Saharan Africa is one of the fastest growing regions in the world. In less than 30 years, Africa will have a workforce of more than a billion people, and it has demographic destiny on its side.”

Demographics is destiny. Young people, trainable people, people that are alive and have new energy, a billion people in Africa, sitting on the continent with the richest resource endowment, and the Chinese know this. You know, China has just been announced as being the largest oil importer in the world, passing the U.S. Fourteen percent of all of China’s investment outside of China is going to sub-Saharan Africa. And the Chinese are anything but stupid. Why are they going to Africa? Well, you know, we’ve worked there for decades. And I just want to give you a brief overview. This is in the northern Transvaal, this area used to be called Potgietersrus, now it’s called Mokopane. A beautiful part of the world, look at it. And there we have found a new type of platinum-palladium-nickel-copper-gold-and-rhodium occurrence, right under the eyes of the traditional South African mining industry. Right in the heart of South Africa, because the problem with South Africa was that people would mine something, they’d find something 100 years ago, and today we would mine what we mined yesterday, and tomorrow we’d mine what we did today, and the industry just had blinders. They mined the UG2 and the Merensky Reef for 100 years, no imagination.

By looking outside of the box, we found something that looks like [Ivanplats’ Platreef project in South Africa] . . . the Platreef discovery is an entirely transformative precious metals discovery. The most important part about it is that it’s flat, thick and continuous. It’s as thick as an eight-story building, it’s entirely unlike any of the platinum that has been mined in South Africa for the last 100 years, so imagine the resource endowment that sits in the rest of South Africa if Canadian geologists team up with local communities and think outside of the box in all respects. Think outside of the box in how you find something. Think outside of the box in how you develop something. Think outside of the box about how you partner with the local people who need to uplift themselves and make history, as opposed to just making money.

Now, in the Democratic Republic of the Congo, this is a country that has had a tumultuous history, to say the least. And we have 80 million people there. And if I show you [a slide of sand and grassland] and ask where you are, you might think that you’re on Prince Edward Island here in Canada. You see sand and grassland. Where are we? We’re in Katanga province, and there again, even though mining had gone on for a hundred years, they were mining under the colonial patrimony of the Belgians, the mines that the Belgians exploited for 100 years. Our geological team of Canadian geniuses went there looking and thinking outside of the box. And really just thinking different. You know, when Steve Jobs founded Apple, the motto was: “Think different.” Regis McKenna, his public-relations guy, dreamed up that motto, by the way, but think different.

Just by thinking different we found something that looks this: This is the Kamoa discovery [superimposed] over the city of London for scale. This is the largest and highest-grade discovery of copper metal in the Congo since King Leopold gave up his ghost in 1905. It was just hidden in plain sight, 20 km west of Kolwezi. It is a continuous blanket of mineralization, nine or 10 metres thick. We’ll be mining 4% copper there for a generation, and after that, we’ll be mining the 3% low grade. Now, this was not known to exist! So when people think of the Witwatersrand, or they think of UG2, or the Merensky Reef, that’s stuff that was found 100 years ago.

This is a continent with an incomprehensibly rich resource endowment. This is a country that has the resources and the demographics to transform itself dramatically. Now, countries are like stocks, sometimes stocks get overvalued. Other stocks get no bid, they get really, really cheap, they can’t get any lower. These African countries are about to explode with upside.

It’s obvious that if we’re going to uplift human beings and we’re going to have 9 billion people on this planet by 2030 — 9 billion — if you want to have clean air, if you want to feed everybody, Africa has to be developed. It can no longer be the continent that is left behind. It must be the leading continent for economic growth.

And one more! Kipushi. This [project] is right on the Zambian border in the southern Congo. We have gone back to this mine. In 1928, when it was developed during the days of the Belgian dominance, it was the richest copper mine in the world. The copper in that pit was 18% copper, in an open-pit mine. Eighteen percent! This thing makes Kidd Creek here in Canada look like a pimple on the derrière of a rat. Right. I mean this is really, really, high grade, ladies and gentlemen. You want to find something like this, you have to go to the Congo. And when they were drilling down there in 1991–92, they drilled to the footwall of that green orebody, that green orebody was running only 10% to 20% copper, 50 metres thick. Look what they found in the footwall: 45% to 50% zinc! In the U.S. we’re mining 4% zinc today. Every cubic metre of that rock holds $4,000 worth of zinc, and zinc is the new fertilizer, it’s the new potash. Zinc is important for agricultural development.

I’m just giving you a few brief examples of the kinds of things that have been known in Africa historically. I’ve listened carefully to the words of the Deputy Minister, and I had the opportunity to speak with him last night about the need for us to jointly find a new paradigm. A new way of doing things. The resources are there, the people are there. Mining companies have to find a new way of working with local people to their mutual benefit. The concept of a social licence is terrifyingly real, because you can’t fool anybody. If local people don’t feel some immediate and long-term benefit from what you’re doing, don’t go there. But if you’re committed to making history, this is the time to begin Africa’s decade. I’m honoured to address this conference. Please follow us, we really mean it. We’re about 21 years into it, and we’ll give it another good 21 years, God willing.

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Ivanhoe Mines Reports Independent Mineral Resource Estimate for Its Historic Kipushi Mine in the Democratic Republic of Congo
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Ivanhoe Mines to Release Final Tranche of Locked-Up Shares


A worker cuts core at Ivanplats' Platreef PGM-nickel-copper project in South Africa. Source: Ivanplats
A worker cuts core at Ivanplats' Platreef PGM-nickel-co...
Ivanplats founder Robert Friedland.
Ivanplats founder Robert Friedland.

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