Stocks Digest LLC

Stocks Digest LLC

October 19, 2012 10:38 ET

Mine Strikes in South Africa Could Boost Outlook for Dominican Mining Companies Such as Santo Mining Corp. (SANP)

NEWARK, DELAWARE--(Marketwire - Oct. 19, 2012) - It was continued bad news for many South African mining concerns this week, amidst ongoing strikes that began in August at Lonmin and spread throughout the country—resulting in the firing of thousands of workers and a total of more than 50 deaths during protests. On Wednesday, Standard & Poor's announced that the world's #3 and #4 gold producers, AngloGold Ashanti (AU) and Gold Fields (GFI), may have their ratings cut to junk, and noted increased business risks "in light of continuing strike action in South Africa and the possible implications of increasing social tensions for the mining industry."

Mining firms in the gold, platinum, and other sectors have already suffered significant financial losses from decreased production, and the South African rand has fallen nearly 5% against the U.S. dollar. Settlement of the original strike has created headaches for other mining companies and upward pressure on wages—well above the rate of inflation—that could result in the loss of tens of thousands more jobs. Despite pleas from South African President Jacob Zuma for striking workers to return to the mines, an end to labor unrest is nowhere in sight, and the Congress of South African Trade unions now threatening protest marches on October 27 if the fired workers are not reinstated.

Today the world's fifth-largest gold producer, and #1 as recently as 2007, South Africa already has the highest mining cash costs of any major region, and the strikes are sure to exacerbate the situation. With strong gold demand around the world, production will need to ramp up in countries with more politically stable environments.

The Dominican Republic is one example of a region that could benefit from South Africa's persistent labor issues. The country has a pro-mining policy and is a full member of the DR-CAFTA Treaty, under which foreign investors from the U.S. and the other member countries are covered by a wide spectrum of protective provisions.

The Hispaniola Gold-Copper Back-Arc, a volcanic belt running the width of the island, contains significant reserves of gold and silver as well as industrial metals. Companies here include a who's who of mining leaders such as Goldcorp, Perilya Gold, Goldquest, Newmont Mining, Eurasian, Everton, Brigus (BRD), Unigold, and Xstrata. But investors seeking an up-and-comer might want to consider taking a closer look at a junior gold exploration firm, Santo Mining Corp. (SANP). The company has moved decisively to acquire six high-potential claims within the gold region, alongside many of the best-known names in the business—and could very easily be on the path to much bigger things.

About Santo Mining Corporation

Santo Mining Corporation is an aggressive junior minerals exploration and development company, based in the Dominican Republic. The company is actively acquiring and exploring its properties, which are strategically located in the prolific and highly prospective Hispaniola Gold-Copper Back-Arc area in the Dominican Republic. A detailed description of the Company's activities is available at SantoMining.com.

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