1. African Energy Project Development Challenges
POWER-GEN Africa Conference, Johannesburg, South Africa
6 November 2012
Ron Miller, P.E.

2. Agenda
Newmont Overview
Energy Demand Growth
Resource Assessment / Fuel
Transmission / Reliability
Project Economics / Financing
Government Support, Environmental & Regulatory Policy
Non-transmission Infrastructure
Labor
Opportunities
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3. Newmont Mining Corporation Overview
The world’s second largest gold producers
Founded in 1921 and publicly traded since 1925
Only gold company included on the S&P 500 Index
Fortune 500 listing
More than 43,000 employees and contractors worldwide
Joined the Dow Jones Sustainability World Index in 2007 and included every
year since
Ranked number 42 as Best Corporate Citizen by Corporate Responsibility
Magazine (2012)
Attributable gold reserves of 99 million ounces at the end of 2011
Attributable copper reserves of 10 billion pounds at the end of 2011
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4. Energy Demand Growth
“The key to sustained economic growth in sub-Saharan Africa is access to
energy.” *
Current low power reserve ratio / spinning reserve contribute to a “stressed”
power grid
Power supply may be barely adequate or already behind demand in some
African nations
On-grid, additional backup power generation can range from 20% in Ghana to
almost 50% in Nigeria
How to meet demand and keep up with Africa’s annual energy demand
growth to aid in economic development?
* Assistant Secretary of State for the Bureau of African Affairs Mr. Johnnie Carson in his Opening Speech
Outline, Africa Partnership Forum, OECD Paris, Wednesday, April 25, 2012
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5. Energy Demand Growth
African nations in the 10 fastest
growing economies in world for
2001-2015
African countries’ GDP growth 6-
11% per year range
BP Energy Outlook 2030 Report
projects ratio of global electricity
growth to GDP growth as 70%
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6. Resource Assessment
Type of demand: continuous 24/7 operation, variable, or daytime only
Location: inland or coastal
Fuel logistics, reliability, and price
Energy storage capability (grid, hydro pumped storage)
Regulations:
Incenting renewable energy
Carbon tax discouraging coal
Renewables or fossil fuel?
Which resource is best used to meet local demand?
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7. Resource Assessment - Renewables
Solar Resources Biomass Resources
Intermittent energy production High capacity factor
Relatively-low capacity factor Logistics of feedstock delivery
Less site-specific Potential for tax incentives
Source: USDOE, National Renewable Energy Lab Source: USDOE, National Renewable Energy Lab
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8. Resource Assessment - Renewables
Hydro Resources Wind Resources
Flow rate / Dam height Variable energy production
Impacted land area - resettlement Relatively-low capacity factor
Relatively-low capacity factor Site-specific
Site-specific Source: USDOE, National Renewable Energy Lab
Source: USDOE, National Renewable Energy Lab
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9. Resource Assessment - Renewables
Determining the amount of energy each alternative can generate based on its
“fuel” (solar irradiance, wind speeds, biomass tons/caloric value, hydro
reservoir depth/flow rate, geothermal heat/pressure)
Evaluate combining complementary energy generation technologies to
achieve desired energy requirement
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10. Resource Assessment - Fossil Fuels
More predictability in power production, higher capacity factors
Fuel pricing mechanism, industry index/market, hedging strategies
Alternative fuel supply plan as contingency
If not domestically-available, must be imported with attendant coastal import
and storage facilities, and dependent upon foreign long-term supply sources
Liquid fuels incur truck logistics cost and potential liability
Increasing world demand for petroleum products, can fuel future price inflation
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11. Resource Assessment - Fossil Fuels
Natural Gas - domestic pipeline and gas
processing infrastructure, low energy production
cost, clean burning
LNG - capital for regasification, relatively-low
energy production cost, clean burning
Coal - low energy production cost, potential for
carbon tax levy, air emission equipment required
Heavy Fuel Oil - heating of transport and storage
required, air emission equipment required, mid
energy production cost
Light Crude Oil - air emission equipment required,
mid energy production cost
Diesel - high energy production cost
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12. High Energy Price - Diesel, Crude
OPEC Basket Price
120
100
80
60
40
20
0
Source: http://www.opec.org
• Liquid fuels tied to world crude pricing subject to both volatility and higher prices
• For 20-year life cycle for diesel engine generator, fuel is 90% of costs
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13. Transmission / Reliability
Connecting energy supply to demand
Africa has outstanding hydro renewable energy resources estimated at over
100,000 megawatts (MW) in potential capacity (DNC alone)
African oil and gas discoveries in Kenya, Ghana, Côte d’Ivoire, Angola,
Equatorial Guinea providing local fuel supplies
How to encourage development of these resources for power generation
and export to other African nations?
How to gain economies of scale from larger generation facilities to supply
needed power and lower price of power?
How to use stranded associated natural gas to produce low-priced,
environmentally-friendly power and move to market?
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14. Transmission
Improve intra-country and
inter-country transmission
system
Increase reliability of the grid
Reduce grid outages that
adversely affect generation
and load centers
Gain economies of scale in
generation
Reduce need for high-cost,
emergency diesel
generators
Leverage the entire Africa
portfolio of different energy
resources
Source: African Energy, Atlas 2010
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15. Transmission
Effective power wheeling framework needed
Certainty in future tariffs
Standardized, transparent framework
Pricing and risk sharing to facilitate wheeling
Cross-border PPAs
Mozambique’s Mpanda Nkuwa 1,500 MW hydro project would benefit
entire region but needs collaboration with other country’s utilities
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16. Project Economics
Develop Cash Flow Model
Focus on fuel availability, price, logistics, “Plan B”
Estimate capital costs for each generation fuel source
Allowances:
Additional logistics costs and time due to different infrastructure
base
Construction costs vary by country and site due to productivity differences
Operating, logistics, fuel storage/handling, maintenance, plant operation
staffing costs
Financial and tax incentives from host government for new generation
Import duties, infrastructure
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17. Financing
Project must have sufficient rate of return to attract investment capital
Structure of generation entity:
Independent power producer (IPP)
Public private partnership (PPP)
Equity and debt financing limits
Recent focus on lower risk markets, but reduced bank financing capacity is
larger issue
Ability of African banks to raise USD dramatically affected, may cap project size
Funding Sources:
African Development Bank Group
World Bank
International Monetary Fund
Emerging Africa Infrastructure Fund
InfraCo Africa
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18. Financing, cont’d.
Market requires bankable Power Purchase Agreement (PPA) *
Balanced liability
Protections for risks not within their control
A stabilization clause for changes of law
Fair termination events for buyer and seller
Appropriate termination compensation
Attract private sector off-takers / quality creditors for power projects
Integrated mining / power projects
New mining investment is key to our economies over next 20 years
Using Diesel Generators cost GDP and jobs
Government support (PPP) may be required
Stand behind buyer
Provide comfort to private sector (developers, equity participants, lenders)
* Source: “Financing Power Projects in Africa”, Jeannot Boussougouth, Standard Bank, 1 July 2011,
UNECA 2011, Addis Ababa
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19. Project Economics
Risk Mitigation
Portfolio of power off-takers, mixture of private and public
Portfolio of investors of different countries to balance risk
Revolving letter of credit (LC) to ensure payment
Creditworthiness and long-term viability of energy off-taker
Develop “Plan B” for selling power; evaluate risk of one or more
off-takers defaulting
Penalties for non-payment
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20. Government Support, Environmental &
Regulatory Policy
Political risk
Government policy toward energy generation
Environmental policy and regulations differ by country
Energy projects require many permits and studies:
Environment impact statement / assessment
Water usage
Air emissions
Land acquisition
Construction permit
Import licenses and duties
Potential re-location of existing villages
Work visas for both construction and ongoing operating staff
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21. Non-Transmission Infrastructure
Highway and railway system for transportation of key equipment to generation
site
Pipelines, compression stations for natural gas delivery
Logistics of fuel supply, handling, decanting, storage
Fuel and freight import facilities: new terminal, port, jetties
Communications systems
Source: Globeleq. Tanzanian 180 MW gas to electricity project
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22. Non-Transmission Infrastructure
Positive correlation between infrastructure expenditure and GDP growth for
increased productivity, reduced logistics costs
Inadequate infrastructure cited as a key constraint to investment and growth
Sub-Sahara Africa requires US$ 93 billion/year in infrastructure investment
Cost of trucking increases in Africa by between 684% - 1,560% due to poor
road conditions from lack of adequate roads and bridges (Council for Scientific
& Industrial Research (CSIR)
* Economic Research (Aschauer, 1989; Munnell, 1990)
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23. Labor
Adequate skilled labor for:
Generation construction
Operation and maintenance
Ex-pat vs. local labor supply cost evaluation
In-country productivity
Training programs to develop the skill sets required for both infrastructure
improvements and new generation facilities
Source: Africa Energy Yearbook 2011 23

24. Opportunities - Summary
Better policy frameworks to attract investment and align economic returns with
investor risks and returns
Encourage independent power producers (IPP) and public private partnerships
(PPP) to facilitate development deals
Seek private sector power off-takers to secure financing
Improve transmission grid and its reliability to:
Access power generation fuels (wind, natural gas, hydro) and connect to load centers
Reduce reliance on high price emergency diesel generators
Limit load shedding which inhibits economic growth
Decrease highway logistics issues with truck transport of diesel
Harvest abundant energy sources with larger scale projects
Limit importation of liquid petroleum fuels due to high price for power generation,
high life cycle costs, and future price inflation
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25. Contact Information
Ron Miller, P.E.
Energy Solutions Manager – Africa Region
Newmont Mining Corporation
303-837-5236
ronald.miller@newmont.com
www.newmont.com
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