It's good that developing nations are taking greater stakes in resource projects however i think in the long term, combined with foreign risks, will limit the rationale for JV structures like what Atlantic has with Piedmont.
I went over the numbers of a gold mining operation in Africa once. The majority of the benefit to the country is in payments in the normal course of business like wages and contracts, followed by royalties, then taxes, then finally a small amount from direct ownership. If a nation gives itself free ownership in resources all it does is increase risk for investors by putting a lower ceiling on potential valuation. On the other hand, if they buy in, it is a great de-risking boon to developers trying to raise capex and is a risk-sharing partnership. The difference here is probably determined by corruption. See for instance the free (or at a steep discount) 5% Mali is going make miners 'cede' to 'local investors' on top of the free 10% for the govt. You can be almost certain it's not the local villagers. Considering what's happening in Mali this Ghanian deal of ~19% direct national ownership in the project is probably reasonable especially since a lot is paid for. A11 interest is reduced from 42% to 40.5%? MIIF purchase has already been completed so the new news is the extra 3% for the state, or -1.5% for Atlantic. A strange move tbh, not very impactful for Ghana, but the surprise will probably affect investor confidence in the short term - the granting of the mining licence will be bittersweet, imo.
Another view is that lawful Ghana is freeriding Mali's coat-tails - as above, it's hard not to make the comparison to the worse example.
A11 Price at posting:
47.5¢ Sentiment: Buy Disclosure: Held
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