JOHANNESBURG – That’s right, an Internet café.
We could be sitting here, reviewing Great Basin Gold’s (TSX: T.GBG, Stock Forum) metallurgical plant designs. Or you and I might be examining the accuracy of the South African gold miner’s long-hole stoping trial – a drilling methodology that could slash costs and boost grades in quantum leaps.
After this most recent visit to the South Rand Basin, I even can quote chapter and verse on geological structure for the Kimberly Reef, a 100-minute drive of sunflowers, corn fields and rolling hills from downtown Johannesburg.
But no. Once a year, as voracious as I am about our audience’s natural resources, I must select a winner in the world of – it weirds me out to state this – social responsibility.
Great Basin Gold, a kick-ass Planetary Prospect of Ticker Trax, is planting the tree of success at the Burnstone Mine from which I have just returned. GBG’s team of stock-owning South Africans appears to care about its hard rock heritage and its heirloom tomatoes.
The new gold mine is right next to corn crops as thick as a brick, and I got to plant the first in a line of trees at the spic-and-span property. Even the we’ve-seen-it-all analysts, writers and investors on this swing through the new mine, which has been in planning since 1999, raised an eyebrow or three when they saw the spanky cool Internet café, just yards away from the mine entrance. 
For sure, the South Africa (and Nevada) company’s shares are undergoing a steady and long-overdue closing of the valuation gap with its more expensive peers. Otherwise, Ticker Trax in its relentless search for metals profit (back to Colombia next week for fourth time in four months – something red-hot!) would have spent more time on the other side of the Wits Basin, the world’s largest source of gold in the known history of the planet, and less time on this side. (Please see some photos of our visit to GBG’s Burnstone this past week.)
Yet these days, particularly in the Republic of South Africa, profit power goes only so far. The “kids” these days, be they 30-something fund managers such as Graham Wark of California’s Franklin Templeton Advisers or locals such as equity analyst Percy Takunda Chiweshe of Imara S.P. Reid -- want their mega returns and some sense that the miners they support are doing the earth some justice.
“Great Basin gets big points for creating good will in probably every category that matters in South Africa right now: black empowerment, safety, health, hiring practices.” This comes from Platinum Group Metals’ R. Michael Jones, a Canadian CEO who is developing his own mine, albeit platinum, way up there on the Western Limb of the Bushveld Complex.
Great Basin, since formulating the idea of a long-life, steady producer of South Africa gold from shallow ground some 10 years ago, has hit most marks for the government’s fresh thresholds for black ownership, housing, safety and so on. What is remarkable is this: The mine is probably the first in the country’s Witwatersrand Basin in at least 30 years.
First in 30 years – spells trouble in South Africa, where all the rules of mining have been thrown high into its deep blue skies since 2002 or so, when government agencies rewrote many of the environmental and ownership rules.
“Our project is difficult by nature, as all green fields projects tend to be,” executive project manager Louis Scheepers tells me, as we share some Vitamin Water outside the new Internet Café. “The fact that it is situated in a non-mining district impacts heavily on first line logistics, like off-the-shelf skills of workers and more. ”
The numbers: Jobless rate in the Burnstone area is said to be 38 percent. Prevalence of the HIV virus is said to be 24 percent among workers. Some 32 percent of the area population of 40,000 has reached grade 12 education.
“So you can see, the pressure on the team is immense, and the date of going into full production is looming on the horizon. Nevertheless they work hard and believe in the outcome. We are proud of them.”
In the past week, as I roll through deep and shallow properties in and around the Wits Basin, I hear in various stops – such as Harmony Mines’ Tshepong property – that government is calling tough shots now on at least three areas of “social responsibility”: mine safety, mine health and mine ownership.
At many presentations for fund managers and analysts, the social literature is getting front-page play these days. At a Harmony presentation at Tshepong in the Free State, executives actually started the tour with a roundtable recital of scripture – “For God so loved the world …”
It is no wonder that some North America investors and analysts – and more than a few high-profile fund managers whom I know personally and who wield billions of dollars of buying and selling influence in natural resources – want no part of South Africa these days.
They do not want the legacy of deep mines such as Tshepong, Harmony’s leading gold producing mine. They do not want chafing rules. Many of them, whilst not willing to state it publicly, do not want scripture.
I think they are daft. Old-age companies such as Harmony and new-age ones such as Great Basin Gold are scraping their legacies, reinventing their mantras and charters or starting fresh and clean. By the way, this is not just about South Africa. GBG, for one, is taking its attention to safety, forward thinking and community support to its locations in Nevada – with stunningly positive results. (Please see Ticker Trax archives for more.)
I believe South Africa’s productive mines still can lure international investors looking both for promising areas of exploration and rock-solid returns from decades-old gold mines. I think some of them – at the forefront Wits Gold (TSX: T.WGR, Stock Forum) with its vast holdings, and CEO Ferdi Dippenaar’s Great Basin Gold (GBG) with its spic-and-span Burnstone Gold Mine some two hours from Johannesburg, can survive and thrive amidst all challenges to success. These include rising electricity costs, those 25 percent HIV rates among South Africa miners and an expensive rand currency that bites into profit margins for RSA-domiciled miners.
If I had the time here, I would go into some of the other initiatives taking place at social trend setters in South Africa. (I mean, when was the last time I saw John Elkington’s triple theory on sustainable development in a mining presentation to money managers – how about, never! Until now at Burnstone.)
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But I do not have the time. See, my audience pays me to make it money, and today, we are doing that – at Ticker Trax. I just wish we had more room in the world for an Internet café or two at a dusty old mine.
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HOLDINGS: Thom’s stock holdings are listed for all Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He also owns recently minted gold and silver coins and shares of two private companies, one of them a nickel and platinum prospector in South Africa & DRC (Congo) operated by Robert M. Friedland. Thom does not do private placements – with the one exception this yea, he hopes, of Titiribi-Sunward in Colombia … nor does Thom accept payment in return for coverage. Thom participates in select company-sponsored and company-paid tours of mining sites after examining the properties off-site for many months and in some cases, years.
(All photos by Thom Calandra. Thom owns shares of 12 of the 12 Planetary Prospects in Ticker. This would include Premium Exploration above.)
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THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom co-founded and was executive VP of news for CBS MarketWatch and MarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold and dyed his hair blonde multiple times as gold surpassed $400, $500 and $600.
Ticker Trax™ is published by Stockhouse Publishing Ltd. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader’s reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Trax does not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax. PLEASE DO NOT EMAIL THOM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2010 all rights reserved.
