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G. Joel Chury
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G. Joel Chury is a veteran investment columnist for Resource World Magazine and the Editor in Chief of VantageWire.com and author of the Bottom Line Report newsletter. His knowledge of both the mining and oil and gas sectors along with his ability to sift through TSX.V data and press releases... More
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  • Read My Lips: South African Minister Announces No Mining Tax Surprises  0 comments
    Feb 6, 2012 12:50 PM | about stocks: GBG, ATL, GWMGF

    In an effort to quell fears of tax regime change, South Africa's National Planning Minister, Trevor Manuel, insists no surprises to come.


    SOURCE: VantageWire.com - According to South Africa's National Planning Minister, Trevor Manuel, the country will not be hitting mining companies with any surprise new taxes. While Manuel hesitated to leave his statements at that, he did hint that there may be adjustments to existing codes on the industry, and reiterated he importance of sensible taxation to extract rent from the industry and direct that investment back into South Africa's development.

    "I don't think that surprises are good for an industry like this and this is likely to be the trend taken by government in introducing change," Manuel told delegates at a mining conference in Cape Town.

    From a tax perspective, companies traded outside of South Africa can breath a sigh of relief, as there had been rumblings of possible changes coming against their interests. Still on the horizon is the study commissioned by South Africa's ruling African National Congress on whether or not the country should nationalize its mines. Local media reports have tipped the hand that the study will most likely reject nationalization and come out in favour of higher taxes and royalties, which appears contrary to Manuel's position. However, Manuel insists that should any tax changes arise, a long-term view will be taken and changes will be implemented slowly, so as not to shock the system.

    The timing of the news comes perfectly for Vancouver-based Great Basin Gold (TSX: GBG) (NYSE Amex: GBG), which today released an operational update on its properties, including the Burnstone Mine, 50 miles southeast of Johannesburg, South Africa. A steady increase of recovered gold for the mine showed that the work being done to increase ore development meters by 4%, while decreasing waste development meters per quarter decreased 48% from Q1 2011 effective. The goal, as stated by the company's latest presentation pegs a targeted production of 254,000 gold ounces, with a mine life of 25 years.

    And while there are plenty of notable mining giants in the region, such as Rio Tinto, BHP Billiton and DeBeers, the field contains plenty of other players that can be tracked on North American indices. Outside of gold, other entities include platinum production and rare earth production among other metals worth looking at.

    Currently mining platinum group metals, Anooraq Resources (TSX-V: ARQ) (NYSE Amex: ANO) announced last week a restructure, recapitalization and refinancing transaction for its companies aimed at increasing platinum group metal (NYSEARCA:PGM) production at its Bokoni Platinum Mine. Previously deferred until after 2020, the new structure sees the Mine receive an anticipated boost of needed capital (to the tune of US$325 million) through a new capital development programme designed to add 100,000 PGM ounces per annum by 2016. Through some shuffling and dealing off of its undeveloped properties, Anooraq's focus shifts primarily to production moving forward unfettered allegedly without major tax shifting coming down the pipe.

    Another platinum producer of note to look at in South Africa is Eastern Platinum (TSX-V: ELR), with production at its Crocodile River mine, and another on the way in 2012. So far the company has shown its ability to produce PGMs at a rate of 130,000 oz per annum (in 2010), with significant growth potential to 160,000 ounces per annum planned by 2014.

    Based out of Saskatchewan, Great Western Minerals (TSX-V: GWG) (OTCQX: GWMGF) accurately saw the South African government being pro-development and moved forward with its Steenkampskraal Mine in the Western Cape Province of South Africa. Owning 74% of the mine designed for Rare Earth Extraction through the production of monazite. A series of steps taken by GWG were designed to "fast track" the project into launching during the first quarter of 2013, after suitable refurbishment of the historical mine site the new Steenkampskraal design is supplanting. The company reported that it had successfully carried out the first full-scale melt with its newly acquired furnace, with the first pour ceremoniously being undertaken on January 27, 2012.

    The news comes with some caveats, but the overall outlook for South African miners is that of relief that no big shocks are on the horizon. The result will be a safer playing field in which to operate, and to hit future targets without a significant fear of nationalization or major tax hits to come.

    G. Joel Chury

    Editor in Chief

    VantageWire.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Disclaimer: No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. VantageWire makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the VantageWire only and are subject to change without notice. VantageWire assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. The author of this article does not currently own shares of any of the companies mentioned in this article. Furthermore, VantageWire assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this article.

    Themes: Mining, gold, platinum, rare earths Stocks: GBG, ATL, GWMGF
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