Investors favour North American assets over African: Sprott

Core Viewpoint - Rising gold and silver prices, along with resource nationalism in some African countries, are making North American mines and projects more appealing to global miners seeking stable operating environments [1][3]. Group 1: Geopolitical and Market Dynamics - Military governments in West Africa's Sahel region are reallocating wealth through agreements with Western mining companies to benefit their impoverished populations [2]. - There is an increasing trend of African governments demanding higher royalties and renegotiating tax and mining codes, leading to a preference for stable jurisdictions like Canada and the US [3]. - A yearlong dispute between Mali's government and Barrick Mining resulted in the suspension of operations at Barrick's mine, highlighting geopolitical risks that drive miners to more stable regions [4]. Group 2: Investment Trends - Sprott Asset Management has reduced exposure to companies with African assets due to the ongoing geopolitical risks [5]. - Fresnillo's acquisition of Probe Gold for C$780 million ($556 million) indicates a growing interest in Canadian mining assets [6]. - Despite security concerns in Mexico, the administration's efforts to shorten permitting timelines are expected to enhance mining investment in the long term [6][7]. Group 3: Precious Metals Market - Global interest in gold and silver has surged over the past two years, driven by inflation concerns and a declining confidence in the US dollar, with gold prices increasing by 65% in 2025 and silver more than doubling [7]. - Silver is projected to be in deficit for the sixth consecutive year, with investment demand expected to reach a three-year high of 227 million ounces, offsetting declines in jewelry and silverware demand [9][11]. - The demand-supply dynamics for silver have been strong for several years, with stagnant supply and growing demand, particularly from the electronic and solar sectors [12]. Group 4: Broader Metal Market Trends - The rising prices of various metals, including copper, uranium, and lithium, are attributed to their essential roles in electrification and power generation, which are critical themes for the future [13].