Coordinated approach key to investment success

In its endeavours to add projects to its portfolio, diversified mining services group Siyakhula Sonke Empowerment Corporation (SSC Group) focuses on pursuing gold and platinum opportunities.

Owing to the cyclical nature of gold mining, SSC Group CEO Fred Arendse highlights that a diversified group strategy – not heavily reliant on gold mining per se – is incorporated in the business and, as such, welcomes the potential inclusion and partnership with platinum group metals miners.

Tracking the demand and supply aspects of gold is key to determining when and where to invest in gold-producing assets.

“ . . . gold is doing well in terms of pricing, but we need to watch the demand space. Gold is an emotional metal. If there’s conflict, the price goes up. So, we need to find the relationship between gold demand and supply,” elaborates Arendse.

He also stresses the importance of finding a connection between a mine’s production and earnings profile.

Despite these challenges, Arendse hopes that there will be an increase in gold exploration initiatives in South Africa, as this will have a positive impact once companies spend more on exploration drilling than has been invested in this space of late.

While acknowledging that a high gold price and a weak rand present attractive gold investment opportunities for the company, he highlights that interested parties would also need to consider the quality of the gold orebody and the life-of-mine, thereby assessing the extent to which gold can be optimally and economically mined, and for how long.

“You have to have a combination of being able to mine optimally and at the right grade for a long period, and you need to price it in a way that does not just rely on the high gold price, because that can change,” notes Arendse.

Having yet to acquire a gold mining interest, the company has a vested interest in mine rehabilitation company Imvelo Riverine Restoration, which undertakes legacy mine-site rehabilitation and riverine systems clean-ups.

The company has multiple contract mining service businesses in the group that operate underground mining, from drilling services and infrastructure equipping, to backfilling.

“From reclamation, we recover gold content and . . . turn it into commercial value, in terms of our ambitions of owning equity in the mining assets,” he says.

In this regard, SSC Group has recently acquired a controlling interest in mine contracting company Lesedi Drilling as part of its carefully developed investment strategy.

“For 19 years, the vision of this company has been to have a range of mineral capabilities under one band. This consists of exploration, drilling, underground mining, rehabilitation and the other services that are typically found within the mining value chain.

“Once you have that, then you can plug . . . these companies into the mine, enabling money to be circulated across the group. This is the rationale and the group strategy that we are working towards,” he explains.

Further, the importance of mine safety is the hallmark driving SSC Group’s investment considerations such as gold and platinum mining investment considerations.

SSC Group asserts that one can never put a cost to the initiatives of safety, indicating that this forms a part of the company’s culture.