The African mining industry is an attractive destination for many global mining companies, but structuring deals on the continent is not always straightforward for foreign investors in the sector. That backdrop means many companies and investors turn to the British Virgin Islands (BVI) for investment expertise and support.
Conyers is one of the leading law firms in the BVI and the firm has a wealth of experience advising mining companies across the world, including in relation to investments in Africa. The BVI is a popular jurisdiction for the purposes of structuring such deals for a number of reasons, including the flexible legislative framework and the fact that BVI companies are recognized by and familiar to investors, lenders and securities regulators globally.
“Conyers is able to provide advice to those looking to structure investments in the mining sector in Africa and has developed the expertise to deliver the right results for its clients,” says Nicholas Kuria, a counsel at Conyers.
There are several projects in Africa which the firm has helped to facilitate. A recent example is the Dugbe Gold Project in Liberia. Last year, Conyers advised on Pasofino Gold’s acquisition of ARX Resources, a BVI company which is party to an earn-in agreement with Hummingbird Resources PLC. Conyers has also been involved for many years in the Ambatovy Project, a large-scale nickel and cobalt mining enterprise in Madagascar. It advised the operator of the project, Sherritt International, on a complex restructuring of its investment in the Ambatovy Joint Venture, which involved a multi-jurisdictional team of advisers in Canada, the BVI and Madagascar. The transaction served to demonstrate how BVI companies are used in equity and debt financing structures involving investors in foreign jurisdictions.
“We were able to execute transactions in a timely manner,” explains Kuria. “Our expertise as corporate lawyers is on structuring transactions. So, where there are joint ventures or holding company interests or vehicles being set up, that’s really where we come to the fore.”
In addition to its corporate and financing work, Conyers also has a strong litigation practice. The firm and its clients work closely with local counsel in different countries to understand the local legal framework of each project. For example, some jurisdictions have restrictions on which type of entity is permitted to hold local mineral rights in a particular country. If the local legislation dictates that the holder of the mining right has to be a local company, then the BVI vehicle involved in the structure will act as a holding vehicle or, potentially, as a joint venture. In other jurisdictions, where there are no restrictions on foreign ownership or foreign entities holding a mining right, a BVI vehicle could be the primary operating company which holds the mining right.
The BVI also gives companies a high degree of flexibility in their governance and capital requirements, for example by allowing them to adapt their constitutional documents to investor preferences wherever that is required. This is particularly beneficial in structuring joint ventures that require flexibility when there are multiple investors involved. If the BVI company will be listed, it can be adapted to the listing rules of the relevant jurisdiction. The BVI’s insolvency regime is also considered to be friendly to creditors, and BVI entities are often used in complex and sophisticated lending and security arrangements.
“It's tried and tested,” says Kuria. “That is why we've had the clients that we have, we continue to have the profile that we do and why clients continue to use BVI entities in their structures.”
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