MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto

1. Strategies for achieving "Bankability" for mining projects in Francophone West Africa MineAfrica’s 9th annual Investing in African Mining Seminar - Toronto Stéphane Brabant, Partner, Herbert Smith Paris LLP 8 March 2011

2. A “Bankable” Project is to be… • Profitable but for all stakeholders (Investors and shareholders, States and population) • Legal but also “licit” (e.g. EP and Soft Law) • Secured And for the life of the project 5155799_1

3. Africa • High potential/reward (mining and infrastructure), sovereign rights, mining occupies a large part of the economy • Diverse (languages, systems of law, cultures) with some similarities • Stability (change of government, of law, “revisitation”) • To make a project “bankable” with knowledge and respect of the context 5155799_1

4. Mitigation of Risks, some key issues • Security of tenures, chain of title, secure of all rights in relation to the full project (exploration, exploitation, land occupancy, infrastructure – law, decree, letters) • Well balanced contract (and law), notion of economic equilibrium: • investors (profitability – tax) • state (tax, participation) • population (local communities) • Human rights and Soft law (EP, extractive industry) 5155799_1

5. Key provisions, key protection • BITs (including for banks) • Supranational laws (OHADA, CEMAC, UEMOA, etc) • Stability provisions • Crisis management and dispute resolution • Security over the project/assets/accounts (civil law issues with common law financing – notion of public interest) • Direct agreement and step in rights 5155799_1

6. Appendices 5155799_1

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8. Francophone countries Spanish and Portuguese speaking countries English speaking countries Arabic / French speaking countries Arabic / English speaking countries A continent of cultural and legal diversity Like the rest of the world, Africa is a continent of diversity... …with different influences and languages A world where 6,000 languages are STILL spoken – a number of them in Africa – but one international business language, the terms of which can have different meanings 5155799_1

9. An Overview of African Legal Systems NATIONAL LEGAL SYSTEMSCommon law and civil law traditions Two legal systems in Africa(sometimes complemented by Islamic law or customary law) Systems based on civil law principles French legal system (Napoleonic Code) Portuguese, Spanish and Italian legal systems (largely based on Roman law) Systems based on common law principles Mixed civil law / common law based systems 5155799_1

10. DEPOSIT What does a lawyer see when he looks at a natural resource project?Necessity for legal clarity where there is factual complexity DIVIDENDS HOST STATE JUDICIARY PRIVATE LEGISLATIVE EXECUTIVE ECAs ADMINIS-TRATIVE COURTS LOAN COURTS BANKS $ $ HEDGE AGREEMENT HEDGE PROVIDER HOST STATE’S LEGAL SYSTEM $ BANK ACCOUNT PRIVATE LAW ADMINISTRATIVE LAW BANK ACCOUNT $ EXPLOITATION PERMITS MINING COMPANY MINING/OIL AGREEMENTS DIVIDENDS INTERNATIONAL MINING/OIL COMPANY $ EXPLORATION PERMITS SALE OFFTAKER $ EPC (SUB) CONTRACTOR WARRANTIES HOST COUNTRY OFFSHORE 5155799_1