Africa Finance Corporation (AFC) and Nigeria’s Solid Minerals Development Fund (SMDF) have signed a memorandum of understanding (MoU) to deploy project development funding and technical advisory to fast-track closure and operations of commercial scale mining projects in the West African country, AFC said in a statement.

The partnership follows AFCs flagship investment in the first commercial-scale gold mining project - Segilola Gold Mine in Osun State, Nigeria - through a financing package comprising debt, equity and a stream.

Under the MoU, AFC and SMDF will co-develop mining projects to mitigate risks that would otherwise have prevented financing to drive bankability.

Since 2014, AFC has deployed more than $900 million from its balance sheet and mobilised $250 million in mining projects across Africa in several minerals critical for the energy transition, including bauxite, manganese and copper, the statement noted.

According to SMDF, only a fraction of over $700 billion potential Nigerian mining projects receive the necessary funding due to various financial and development challenges.

AFC and SMDF will combine their own funds with innovative investment tools to reduce risks around exploration, drilling, confirmation of deposits, and third-party development costs, including technical and environmental studies, project structuring, and project contract negotiations.

The statement said that only projects that have completed phases of pre-feasibility studies and secured all relevant government and regulatory permits are eligible for consideration.

(Writing by P Deol; Editing by Anoop Menon)