Mining Investment Opportunities in South Africa

Despite 150+ years of capitalisation and industrial-scale activity, South Africa’s legendary mineral wealth continues to propel the mining sector as one of the country’s stand-out investment performers. Find out more about mining investment opportunities in South Africa.

South Africa is one of the continent’s most attractive investment destinations, and this is especially true of its minerals industry, which accounts for more than half of the total value of its top exports. Here, a well-developed mining infrastructure, deep skills base and of course, a diverse, high-quality range of mineral resources propel the country to one of the most important mineral markets in the world.

It possesses the world’s largest known reserves of gold, PGMs, manganese and chromite, and is a global Top-10 producer of 16 different minerals, from alumino-silicates to zirconium.

Revenue from mining sales for the 2021 financial year for the platinum group metals (PGMs) sector reached R300.7-billion – double the R150.9-billion posted in FY 2020. Sales of iron ore hit R116-billion (+61% YoY), and R102.6-billion for gold (+26% YoY). Annual net profit of the mining sector increased to approximately R274 billion.

Mines in South Africa clearly offer investors excellent prospects for capital growth, but what is the best way to enter the market?

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Investors looking to trade mining stocks should consider mining companies that:

  • Mine at low All In Sustaining Costs, as they are more profitable and more resilient to price fluctuations
  • Have a long-life strategic asset portfolio that can sustain an increasing production profile in the future
  • Have a sustained record of strong returns on shareholder equity yielding good dividends for investors
  • Have excellent Environmental, Social and Governance credentials and values of corporate citizenship and ethics
  • Mine resources for which there is predicted high future demand

Miners that score highly across these key indicators are far more likely to produce greater returns on investments more consistently, and offer investors an excellent trade in exposure and dependability.

PAN African Resources (JSE:PAN, LSE:PAN) is a mid-tier African-focused gold miner and one of the lowest-cost gold producers in southern Africa. The Group’s world-class orebodies unlocked record dividends in 2022, and is amongst the best three performing stocks in its industry in terms of return of equity.

Discover some of South Africa’s top mining assets:

Elikhulu Tailings Retreatment Plant

Elikhulu is a technologically advanced, automated plant processing 1.2 Mt of historic tailings each month from the three existing slimes dams at Kinross, Leslie/Bracken and Winkelhaak.

PRODUCTION: 52 220 oz.

AISC: US$ 1 003

LoM: 11 years

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Barberton Tailings Retreatment Plant

BTRP produces approximately 20 000 oz. per year with the added benefit of turning our Barberton environmental rehabilitation liabilities into profits.

PRODUCTION: 19 560 oz.

AISC: US$ 891

LoM: 2 years

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Evander Mines

No 8 Shaft Pillar is a rich gold-bearing pillar and one of the lowest cost underground gold mines in Southern Africa. Production increased over 35% in FY 2022.

PRODUCTION: 20 000 oz.

AISC: US$ 816

LoM: 10 years

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Barberton Mines

Barberton Mines is a low-cost, high-grade operation with an excellent safety record and a 130-year mining legacy. It comprises the Fairview, Sheba and New Consort underground mines.

PRODUCTION: 75 738 oz.

AISC: US$ 1 645

LoM: 20 years

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Growth Projects

New acquisitions and organic growth projects in South Africa will ensure we maintain our low-cost, high-margin production profile in the future.

Mintails

A new, high-quality tailings acquisition that will increase the Group’s production profile by 50 000 oz./annum.

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24 Level, Evander

Expansion of pillar mining at Evander Mines 8 Shaft to three new underground levels will add 65 000 oz./annum.

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Sheba Mine Expansion

Drilling shows high-grade extensions to the orebodies at Fairview, Royal Sheba and Consort mines, which remain open at depth.

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Why invest in gold?

As a commodity, gold remains a strategic asset. It recently touched $2 000/oz., and continues to trade well. Historically, it has preserved its value over time, and so holds a unique position within an investment portfolio. Gold differentiates from other investment assets in that demand comes from various sources, namely as an investment, a reserve asset, jewellery, and a technology component. It is highly liquid, no one’s liability, carries no credit risk, and is scarce.

Read more about investing in gold.

The growth in SA’s mining industry confirms the resilient nature of the sector and the opportunities that exist in rebuilding the South African economy… In the 10 years to the end of June 2021, the total shareholder return performance of the Mining Index has been 112% versus 22% for the ALSI. With record rand prices for gold, the platinum group metals basket, iron ore and more recently, coal, it was no surprise that the industry’s financial performance exceeded expectations on most fronts.

– Andries Rossouw, PwC Africa Energy Utilities and Resources Leader

ESG and investment

Environmental, Social and Governance (ESG) performance metrics are of increasing importance to companies, their investors and other stakeholders. There is a growing concern around how a company’s products, actions and culture contribute to sustainable development. In a mining context, investors are looking beyond just financial performance to what is being mined, how it is done, the impact on the environment and communities, and how the metals and minerals are used further down the supply chain. Investors are increasingly concerned with ethical impact and whether their investments align with the values they hold towards the environment, society and good governance practices.

Although standards such as size and accessibility of a deposit and its minimum grade remain vital, ESG criteria – such as stable leadership, low carbon footprint and community development – are now also almost standard considerations. And the reasons are not only ethical nor based in compliance; mining companies with higher ESG ratings outperform the broader market:

With a world-class, holistic ESG strategy in place, combined with high-margin, high-quality assets and excellent safety record, Pan African Resources is an exciting choice for investors with a proven track record.

 

 

About Pan African Resources

 

Pan African Resources is a mid-tier African-focused gold producer, dual-listed on the London AIM market and the Johannesburg Stock Exchange, and with a Level 1 ADR programme sponsored by the Bank of New York Mellon. The company owns and operates a portfolio of high-quality, high-margin South African operations with a production capacity of approximately 200 000 oz. of gold per annum, and an unrelenting commitment to zero harm.

Frequently asked questions:

Why is mining important in South Africa?

As one of the world’s leading mining countries, the mining sector in South Africa is an important foreign exchange earner, and a key supplier of many of the world’s most sought-after minerals. It contributes roughly US$ 13.5 billion (R921.2-billion) to the country’s GDP.

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