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Fresh prospects for African mining in 2014

7th January 2014 Print

The close of 2013 was a mixed affair for the African Mining industry. With West African Minerals (WAFM) shares dropping in the last quarter and concerns regarding the risks of investment in the region, it looked like investors on the LSE would be wise to remain cautious when looking into African mining. 

However, the new year is shining a little more positive light on the industry. Despite the 10 pence slide in WAFM price last December, the company is throwing itself into fund-raising for a maiden resource in the Binga region (Zimbabwe-Zambia border). The company already has a resource in Cameroon, but Binga represents a less costly prospect due to its near-port location and access to good infrastructure.

Other companies such as African Minerals (LSE:AMI) remained more stable in the last few months of 2013, despite a shaky summer, with an increase in production and sales for the third quarter resulting in a solid rise in the African Minerals share price.

Elsewhere, current speculation over the results of Savannah Resources’ (LON:SAV) drilling survey in Mozambique, due out in February, has been bumping up the share price since September. Changing their name from African Mining & Exploration heralded a diversifying shift away from gold and onto mineral sands – known for useful pigment and paint minerals such as zircon – and the company CEO David Archer claims the value of the company will only increase in 2014.

This said, nations such as China are advising caution when buying stocks and shares on the continent. Of course, for the foreseeable future, factors such as cultural and political instability will remain important considerations for investors here, but Africa’s rich resources offer opportunities that would also be imprudent to pass up, particularly since China is low on minerals such as copper, manganese and bauxite – minerals which Africa can supply in abundance.

No one who invests in the mining industry can be unaware that high risks are involved, but the potential for equally high returns cannot be ignored. Improving infrastructure in the Eastern states, along with well-placed coastal sites and plenty of as yet untapped resources should be enough to lend African mining fresh prospects for a fresh new year.

Ella Amesworth is a web journalist and blogger who focuses on finance, current affairs and travel news. She is currently based in Leeds.