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If you needed any reminders that Africa is an often high-risk jurisdiction for Australian mining companies and explorers, then look no further than the Predictive Discovery (ASX:PDI) news on Wednesday.
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The company’s stocks have been slammed, -21% in intraday trades, as the government of Guinea, where Predictive has its Argo and Bokoro exploration permits, revoked 129 exploration permits overnight, taking the company’s scalp with it.
It’s not entirely terrible news: Predictive wrote Wednesday the revoked permits do not include its Kaninko and Saman exploration permits, part of an existing exploitation permit application for the company’s Bankan Gold Project.
But many investors, clearly, aren’t liking what they’re seeing.
Guinea, located in the often tumultuous world of West Africa, is the latest gov’t in that region to take a hard stance against foreign mining companies – a strongman policy decision favoured particularly by military junta governments in that part of the continent.
The prevalence of military junta governments in West Africa has led to the term ‘coup belt’ and while that term has its detractors, it’s hard to dismiss entirely. There’ve been ten governmental overthrows across the region since 2020.
Typically occurring in former French colony countries, the juntas are notorious for offering little long-term certainty to investors and company chiefs alike when it comes to natural resources.
That’s what we’re seeing in Guinea. A military coup seized power in 2021; early last year, the junta actually dissolved the government.
This comes ahead of a September referendum in Guinea to, in essence, ask the people if they want civilian rule or not. It doesn’t take a particularly fierce cynic to wonder if that’s really what would happen, even if there’s a yes vote.
And so why would Guinea revoke 129 exploration permits overnight on what appears to be a whim? The simple truth is that African military chiefs, effectively acting as Presidents, can rouse easy support at home by being seen to take on white-owned companies.
It’s not really a strategy limited to the coup belt. It’s the same idea as when Canberra pretends China isn’t our largest trading partner from time to time. Just think about the move to take back the Port of Darwin.
(The problem with West Africa’s junta governments, however, is that most have shown themselves to be fairly terrible when it comes to taking a sober look at mining economics and foreign direct investment.)
Anyway, none of this backgrounding really matters for Predictive Discovery, nor its shareholders – though the upcoming September referendum could now become a focal point as the company figures out, where it can, what to do.
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“PDI has not received any formal communication from the Guinean government on the matter but intends to work diligently to appeal the revocations in accordance with the Mining Code,” the company wrote on Wednesday.
“PDI looks forward to providing further updates in due course.”
PDI last traded at 34.5cps.
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