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Something must be done to make exploration investment attractive – ex-JSE stalwart Noah Greenhill


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Something must be done to make exploration investment attractive – ex-JSE stalwart Noah Greenhill

Former senior JSE GM marketing and business development Noah Greenhill interviewed by Mining Weekly’s Martin Creamer. Video: Darlene Creamer.

8th May 2023

By: Martin Creamer
Creamer Media Editor


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JOHANNESBURG ( – Beginning in the early 1970s, the Canadian government said guys, we're losing ground in exploration investment. We don't seem to be attracting any of that cash. Let's introduce something that attracts money to the sector and they sat around the table and some really clever tax guys came up with the flow-through shares concept.

A flow-through share is a type of common share that permits the initial purchaser to claim a tax deduction equal to the amount invested. The flow-through share regime allows public companies to transfer to investors certain exploration expenditures conducted on Canadian soil.


Flow-through has attracted an inordinate amount of money and in attracting the money, promoted the sector in the jurisdiction, created jobs, provided tax, and not just from an employee perspective, but from a corporate perspective.

Even the smallest of Canadian retail investors got it. The taxi driver who drove me around in Canada had some. Investors understood it, and it's developed since then, and going back a good few years, flow-through shares was a real tag used by companies to promote their operations, notwithstanding the fact that the flow-through share benefit only applied to exploration in Canada. Around the world, people would say, well there's a flow-through share opportunity we've got to be involved in. Interestingly, flow-through was used as a sales tool to attract cash to Canada from around the world.


In the early 2000s, the South African Revenue Service and National Treasury were approached to introduce something similar in South Africa to provide a future for South African mining, its number one industry, by promoting junior mining and exploration.

South Africa’s tax authorities concurred that something had to be done. They gazetted something that only non-mining companies took up and then introduced the 12 J tax reform that was an abject failure and subsequently closed down.

But the right tax incentives definitely do work and in fact generate a lot of tax for the fiscus. There's clear evidence of it in Canada, the UK and Australia – very clear evidence, in fact. The capital gains rollover incentive for investors investing on London’s Aim has attracted money to that market, just as superannuation incentivisation has done in Australia. But South Africa has nothing, and it’s showing, to the detriment of the fiscus, job creation and this country's economic future.

There are millions of people in Canada that invest in junior mining and exploration. Those who have been to the Prospectors & Developers Association of Canada, the PDAC, conference, report seeing many investors walking from exploration stall to junior mining stall and then getting on to their phones to provide buy or sell instructions to their stockbrokers.

Part of the challenge in South Africa is we don't have a big enough retail investment community, which means we're reliant on the major funds, which have been straight-jacketed by National Treasury to invest in the big end of the JSE only. Yet big foreign funds invest in the small end here, as Orion Minerals has proved in the Northern Cape, and foreign-listed companies invest in exploration and mining here, because of this country's acknowledged mineral endowment.

In Canada, explorers don’t have to go to the funds. They can set up with a stockbroker, ask the broker to bring clients and if 100 of them invest $1 000, juniors are already on their way towards raising some decent capital.

But South Africa has a limited retail component; that needs to change, and tax incentives bring about that change by making it beneficial to invest in listed companies.

“A few years ago, I went to one of the stockbrokers in Australia and we were chatting to them. That one stockbroker traded more than the entire JSE. I don't know if that's still the case, probably is. Why? Because there's an incentive to take your hard-earned cash, put it with a stockbroker, grow your wealth, a form of saving, and allow companies to raise capital, do what they need to do, and go forward,” former senior marketing and business development GM of the Johannesburg Stock Exchange (JSE) Noah Greenhill told Mining Weekly in a Zoom interview. Former JSE luminary Greenhill was closely linked to the AltX, the JSE's market for small to medium-sized companies.

Mining Weekly: South Africa is in desperate need of growing the junior end of its mining market. What in your view should be done to ensure investor support for junior miners and exploration companies that are aspiring to list their companies?

Greenhill: It's a complex response to a simple question. Part of the challenge is the perception that it's all about the Johannesburg Stock Exchange and that it’s the Johannesburg Stock Exchange that needs to make the requirements for the listing of especially junior miners and exploration companies. Part of the challenge in that is unfortunately rules are created, as we all know, for the lowest common denominator. They are created to keep the crooks out and unfortunately, the unintended consequence is that the more stringent you make the rules, the harder it is for those that are running honest, good businesses to say, right, we're prepared to spend the money and time in complying with those rules and regulations to get our business on to that exchange. Exchanges around the world have got the same problem of trying to find the equilibrium point between having too much regulation and ensuring that the companies comply with some rules and regulations that give investors confidence, and the insufficient regulation for anybody and everybody who says I've got a hole in the ground, we've drilled one hole and there be gold. That's a challenge for exchanges around the world. But I don't think that's the problem. I do think that the pendulum swings all the time between those two points, not necessarily landing it at equilibrium every time, but exchanges around the world vacillate between too much or too little regulation. The follow-on from that is whether or not the regulation is there to keep the company out or in, either way, or whether it’s there to appease the money. Does the money go, right, we're happy with the governance and compliance construct of that exchange, and because of that, we'll tick the box and put our money into companies listed there. That's the first element of it: has the exchange created an environment to attract companies to list? I think the exchange is fine.

Certainly, my view is that the Johannesburg Stock Exchange requirements are in line with the rest of the world, probably marginally better from a governance and compliance perspective. The fact that you have to be code compliant, the fact that we've created rules to attract dual-listed companies, are all fantastic. Is the JSE any better or worse than our competition, and I use that in inverted commas, being the TSX in Canada, and the exchanges in London, Hong Kong, Australia, or any other exchange around the world? I think we’re in good company. We can hold our heads high from a governance and compliance perspective – and let me just say, crooks will always be crooks. You can have volumes of rules, the crooks will find ways around those rules, it doesn't matter what rules you got. Crooks find ways around rules. That's why we need rules. It's just one of those conundrums that we're never going to solve. No matter how many rules we got, somebody is going to find a way to contravene those rules. That's just the way it is.

The next challenge becomes the money and we look at South Africa. I'm not going to put the statistics out there because many have written ad nauseam around the involvement of the funds in the junior mining and exploration sector in South Africa and it tends to zero, no matter how much you want to flower it. When a junior mining or exploration company walks the streets in South Africa to raise money for the operation or their listing, it is a debilitating, demeaning and often soul-destroying exercise. You know you’ve got a good project, you know you’ve drilled the holes, you know the detail in the documents is solid and complies with all the rules and regulations. Your geologists are world class, your mining engineers are world class, you've got the best of the best, and you walk around and if you can get an appointment, the appointment lasts 20 minutes because at the end of it, nine out of ten times it’s, no thanks, we don't invest in the junior and exploration sector in South Africa.

So now what? The money will only look at you when you're developed, when you have an operational mine. How come? Why is it different in Bay Street, in Canada, in Toronto? How can it be that different that the funds there get it? First of all, they've prepared to see you, because they understand that when they see ten, and they are prepared to invest in ten, one is going to fail miserably, two are going to be downright average, six are going to border on maybe just below average or under average, but that leaves one, and that's all they need – one. One to invest at a valuation of a hundred that becomes a thousand makes the other nine pale into insignificance from a portfolio perspective, and they get it, they understand.

The other argument that I've heard spouted around is that the valuations are better offshore – on the same document, because the document must be the same. The prelisting statement that states the drilling results and the prospective income over time is the same document, yet the offshore fund manager looks at it and says, I'm prepared to put a valuation on this, let’s say 100. The South African fund looks at it and says, not worth 20. How can that be? How can there be such a dichotomy in this valuation? I can't work it out.

I do think that there's a fear factor in the South African fund market and I think it's a function of history. I've said this for years and years. We were a market dominated by the large mining houses. We didn't have to think, as money in South Africa, about exploration or junior mining. We allowed the large mining houses to worry about that. We gave them our money and they then went and explored. We never focused on exploration. We just thought it happened, and if we benefited from it through an Anglo or the JCIs of yesteryear, we didn't have to worry, and I think that's just pervaded over time, that it just happened somewhere, and somebody else takes care of exploration and when it's an operational mine, we'll sit up and invest in the operation. But until then, it was somebody else's problem, whereas Canadians specifically, I suppose you could include the Australians in the mix, get it. They want to be in on the ground floor, notwithstanding value-destructing operations such as the Bre-X scandal. Their memory seemed to go short term. Investors lost money, but it was that specific incident that caused that, and we'll move on. By contrast, South Africans have got long memories. We remember incidents from 25 and 30 years ago, and because it happened in our jurisdiction, it’s going to happen again, and that's just the way it is. I'm loath to bring in the current environment from a political-economic perspective. Maybe they’re right. We’ve taken a country that had infrastructure, had constant electricity, had solid water, had roads, had health care, and we've destroyed it. So, maybe there's an element of an inability to take what's in the ground and develop it. But in saying that, and I'm contradicting myself, we're in the top five in terms of minerals in the world, in terms of what's underground and what can be done with it, and that's not a function of any of the infrastructure that I've just spoken about. People are prepared to come into South Africa and drill. Must be because the stuff's there, and if that's the case, they need the funding. How come are Canadian investors prepared to fund it? How come? There, I don't necessarily have the answer. But, why was Canada successful? Well, the flow-through shares.

I remember the days when we had the infrastructure, we had rail, we had roads, we had power, and often the argument was put forward that why would you want to be in a jurisdiction, and I'm singling them out to just the one that comes to mind, like the DRC, where to get your drill to the location is a five-, six-month operation. We didn't have to worry about that kind of thing. To get your drill to your operation in South Africa, you put it on the back of a truck or put it on the back of a train back then, and the drill was there in a flash. The absence of that now, I think, has created some challenges for us and again I come back to the money. All we do is create more excuses not to invest here. Whether it's the MPRDA, whether it's infrastructure, rail, power, health care, migrant workers. The list is long. All we do is create excuses not to invest. We need to change that narrative. Now I'm not sure if between you and I we can do that, but certainly we need Minerals Council South Africa, we need the Department of Mineral Resources and Energy and the government to stand up and understand that we're in a competitive game, that at the end of the day, money doesn't have to come to South Africa. Money is free to go where it chooses and it does. We can stand on podiums and tell everybody, yes, but we're uniquely African and uniquely South African and you play by our rules and that's fine. Then we end up where we are and having to stand on the backfoot and make excuses as to why we didn't and should have and could have but didn't.

Mining Weekly: There were promises at one stage that we'd have the flow-through scheme, then they changed. We seem to want unique stuff that fails. It's better to just see what is working in other places, and stop trying to reinvent things until we really get things going. Maybe we can do that later.

Greenhill: I think there are a couple of challenges. I think we have to appreciate that this is a five-day game that we should have started five days ago, and my point is, let's look at flow-through shares. In 1972, I think, it was introduced into the Canadian markets. We're in 2023 now. Those benefits have come through the years, but I think they understood that you’ve got to start at a point and 2023 is as good a year as 1972. Let's do something. We can't sit on our hands waiting for somebody to do something. We need to do something. Even in the jurisdiction we've got, somebody just needs to say that this is important for South Africa. This is what mining contributes to GDP. Yes, it's on a declining plane but we can halt that. We can turn that around. We know it creates jobs. We know it contributes to the fiscus, so let's take a point in time and say we need to do something, whether it's flow-through shares, whether it's a tax deduction on an investment in a mining company listed on an exchange, so that there's a mechanism to prove that you've made it and it's not just some private investment, but that's all technical stuff that needs to be worked out by the experts, but do something.

The second point is that one of the unintended consequences of the flow-through shares was that it created a retail investment community in the Canadian market. Again, we've got to be very careful. Listing a company on an exchange is not the Holy Grail. There are lots of ways to raise capital. Doesn't have to be on an exchange. Private equity, venture capital, debt, and it's cyclical. Today the exchanges are in favour, tomorrow it's venture capital. The next day its private equity, the next day it’s some other form of fancy structure. We know that.

But the fact is public markets have been around for years and years. The fact is, they work. Fact is, we’re contrary to global trends, in terms of listings, and capital raise. Why, why? It's, not right. Again, we should be the bastion and the light for the African continent and I think we were for a while. Certainly in the early 2000s, and we just seem to be moving in the wrong direction and I do think that there are really creative ways of changing the direction we're going in. But the retail investor is critical to the success.

Mining Weekly: Can we kill two birds with one stone by incentivising to build exploration investment and creating a retail investor base at the same time?

Greenhill: That’s exactly it. Part of the challenge is nobody's prepared to come to market to challenge the view that there's no money and those that do come to market, don't want a failed listing. They want to go to the safe money and end up not going to the retail market. A bit of a chicken and egg situation. The investors are going, well, we only invest in sure things in South Africa. We don't like risk. We want to invest in businesses that have got long track records, strong management, all of that in place, and then we're prepared to invest.

You’re telling me you got a guy standing next to a drill with some scientific measures that tell you that there's gold in the ground. Don't trust that, no thanks. Again, I say it's a five-day game. We've got to keep at it, and I think part of the problem is that certainly in the 2000s we had a bit of it and then companies wanting to list just kept being battered away with a baseball bat and it hurts, and eventually you stop. Whether it's the corporate advisers, whether it's the management teams, whether it's the funders who are going, well, we've seen five, and we've told all five to go away. Same with the management teams. We’ve been to five, we got battered, it’s enough. Let’s go to where you can raise money, and that’s not on the exchange.

Mining Weekly: What then should be the biggest takeaway from this interview?

Greenhill: We have the resources. We‘re already ten steps ahead, because if you need those resources, you got to come to South Africa. Let's make it conducive for all concerned to play in the game. That means the rules and regulations, whether it's listing, raising venture capital, private equity, debt, whatever it is, are attractive across the board for those guys to come and raise the capital here. Let's make it attractive for the money to invest, and whether that's through a tax incentive, whether it's some other kind of incentive, we need to start the game. We can't be talking about it. Somebody needs to do something, with the acceptance that it's not going to happen in a day. We're in, we've got to be on the field, at the wicket, and for a while we're going to be blocking. We're not even going to hit the loose balls. We’re just going to let the loose balls go. We're just going to block for a while. When we got some runs on the board, well then we can start hitting some fours and sixes, but let's get some runs on the board, and I kind of feel like we've sent in 11 batsmen and 11 batsmen are out. Okay, let's start the game again.


Since the introduction of the flow-through scheme by Canada in the early 70s, there is a direct correlation with exploration activity and investment. The country is today home to more mining companies than any other country, simply by introducing what is essentially a tax credit, but one that can, in turn, be passed on to underlying investors. In South Africa, the big mindset of National Treasury needs to change if this country’s mining industry is to survive.


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