Analyst View, page-34

Hi locshare11,

There aren't too many ASX listed gold miners with South African operations (none that exclusively operate there that I am aware). Possibly the TSX would have some. There are some much larger miners with operations in South Africa as part of a bigger portfolio of global assets.

Despite the falling Rand I would be a little circumspect about South African operators and personally avoid the country full-stop.

Generally, you have to worry about the political situation and the strong unions that are demanding higher wages despite the state of the sector. The PGM group miners have suffered a lot here with strikes over the past few years. From time to time politicians talk about nationalisation of foreign owned mining assets (although they'd be mad to do it).

I also understand that there are issues surround BEE ownership (Black Empowerment Enterprises) whereby local tribes get an ownership stake in mines and can be a very confounding influence at a Board level. You'd need to do more research here as I am rusty on this (I read enough a couple of years ago to put S.A. on my 'no-go' list and haven't updated my reading).

Specifically to South African mines, many have been operating for years and years and are now very deep (and thus expensive to operate). These mines have been high up the cost curve in recent studies that I have read.

As a geek-aside; I saw an interesting doco the other day titled 'the rise of the continents'. This episode focused on Africa. Africa hosts 5 cratons, which are very deep continental rock structures that go deep into the magma (and were the original 'islands' that formed Pangaea). As these 5 cratons are so deep, the gold bearing structures contained within them are also very deep and simply go on and on and on (i.e. the South African gold mines).

Interestingly for West African focused miners such as RSG (and PRU and EVR), West Africa also hosts one of these cratons, so I would expect mines such as Syama, which is "open in all directions that birds don't fly" will continue to a great depth and still be hauling gold from extreme depths when I am well and truly retired (from my gold miner profits!).

Cheers
John