When to Take Your Mining Company Public, the Pros and Cons, and How to Do It

With the economic and political turmoil at present, in the developed markets in particular, currencies are volatile and gold is regarded as a safe haven. Investors turn to gold in times of uncertainty as it can be traded anywhere at any time. With the current gold price being $1786 per ounce and a more than 200% increase over 5 years, it is probably safer than most currencies, even with short term fluctuations.

Gold is forecasted to reach $2000 per ounce before the end of 2011 by many experts including Philip Klapwijk, CEO of Thomson Reuters GFMS a London-based metals consultancy.

Listed Canadian gold mining companies are discovering deposits in Africa. Although they have a presence on all continents, Africa now accounts for about 17 percent of their foreign assets, a 6% increase over the last ten years. Canada is the leading investor in mining in Africa after South Africa.

Peter Koven of the National Post of Canada newspaper is a commentator on Canadian activity in the mining sector. He recently reported share price jumps by some of the established mining companies, such as Orezone Gold Corp., that are active in Burkina Faso in West Africa. There have been many takeovers either completed or in progress involving Kinross Gold Corp. Red Back Mining Inc and Crew Gold Corp.

Matthew Zylstra, a Northern securities analyst, wrote that “in particular, companies located in West Africa and with larger resource estimates are commanding higher premiums as they are seen as more likely to be takeover targets.” Among the juniors, he stated that Axmin Inc. and Banro Corp. trade at the lowest multiple of enterprise value to total resources. Among the producers, First Uranium Corp., Great Basin G old Ltd. and Endeavour Mining Corp. are priced “most favourably”, he said. best mining services 

However, it is not plain sailing for new entrants. There are many areas of conflict and endemic violence to deal with, particularly within the mineral rich deposits areas in West Africa. Canadian companies do not have an untarnished reputation in managing these challenges. Besides volatile regions such as DRC, they are present in Madagascar, Tanzania and Ghana. 91% of Canadian investments in Africa are located within eight countries, including South Africa where the main investments are.

South African mining houses such as Goldfields and Anglo Gold Ashanti are present in Ghana and Mali. The supervisory board chairman of German-listed Pearl Gold told Reuters in an interview that “gold mines in Mali are an underexploited treasure trove for commodity investors”. Mali is certainly one of the most promising locations for gold mining at present,” Robert Goninon said in the same Reuters interview. “Other countries like Guinea, Ivory Coast, Burkina Faso, Mauritania and Ghana offer lucrative gold mining opportunities too.”

 

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