Though emerging markets may have historically been more volatile than the developed world, the perceived higher risks typically come with higher returns than those available in markets that are traditionally viewed as safer. Companies in emerging markets tend to be more resilient and quicker to adapt to challenges because they are used to contending with headwinds.
While the prevailing perception is that emerging markets are slower to issue permits for new operations than developed countries, Pan African Resources’ experience shows it is possible to get a permit issued in far less time in South Africa than in the US and Canada. Getting a permit for Mintails took less than two years compared with the up to 10 years it can take to satisfy all compliance and consultation requirements in North American countries.
Thus, investors looking to diversify their investment exposure geographically and within the mining sector are well advised to consider investing in the South African gold mining sector, with Pan African Resources offering attractive upside potential and safe diversification benefits.
Investors stand to benefit from the Group’s sole focus on gold mining for as long as there are long-life organic growth opportunities. It has no intention of investing in copper or platinum group metals (PGMs) at this stage, instead sticking to its core business and sweating its existing assets by adopting measures to streamline production, maximize the production potential of its existing assets, and address depleting orebodies by using new on-reef methods that reduce waste development and improve overall efficiencies.
Though Pan African Resources’ primary business strategy is to grow organically, it does consider acquisition opportunities where they arise, but will only pursue these if they pass the Group’s strict investment hurdle criteria to preserve shareholder value and improve returns.
The company is interested in diversifying its investor base, looking to partner with like-minded investors who also believe sustainability is critical to long-term success. Pan African Resources has begun targeting the US investor market, seeking investors interested in diversifying away from US recession risks and interested in identifying attractive investment opportunities further afield. The Group’s efforts are bearing fruit, with the proportion of US shareholders in the company increasing progressively over the past year from under 2% to around 6% currently.
Overall, there is a strong investment case for gold and gold shares, with the precious metal offering an unsurpassed long-term investment track record, outperforming the overall stock market and paper currencies historically. Gold is also set to benefit from the bifurcation of the world economy and the resultant efforts to replace the dollar as the world’s reserve currency.
The so-called Global South group of countries, including developing countries in Africa, Latin America, Asia, and Oceania, have already begun exploring ways to reduce their dependence on the Western developed markets and the dollar. In addition, China has been substantially disinvesting from US Treasuries over the past few years, reducing its exposure to assets that were previously the mainstay of its foreign reserve portfolio. Instead, the central bank has been increasing its holding of gold reserves.