By Tekoa Da Silva 

I had the chance to sit down once again with Rick Rule, Chairman of Sprott U.S. Holdings. It was a fascinating discussion, as Rule discussed resource speculation in Africa and his experience participating in world-class deposit discoveries made over the last few decades.

Subscribe here to access Sprott Media video content

“As a place to [discover] world-class deposits, I would suggest to you that Africa and Central Asia are the last great frontiers [for resource exploration]” explained Rule. “Political and social challenges have kept them from being as thoroughly explored as Western nations.”

“The part of resource speculation that interests me is exploration,” Rule continued. “And the subset of explorers that interests me most are the prospect generators — people who use their investment and commercial acumen (frankly their courage), to explore virgin or semi-virgin terrain, and then bring in joint venture partners to drill. Unfortunately, there aren’t very many prospect generators in Africa, so the universe that I have to explore is fairly small.”

Rule further explained that combining high-quality exploration efforts with well-endowed and underexplored geological terrains, makes truly historic discoveries possible.

“I’ve been fortunate in my life to participate in a few [world class African resource discoveries],” said Rule. “The Africa Oil Corp. discovery of a billion barrels of oil in Northern Kenya, [was] previously an [unexplored] place. Paladin [Energy]’s uranium discoveries in Namibia and Malawi — which ran the stock from 10 cents to 10 dollars — [is] a very fond memory as you might imagine. [Other examples include,] Tenke Mining’s tremendous [copper] success in the Congo [and] Moto Gold’s 10 million oz. gold success at Kibali.”

“[So] my outlook for Africa is very bright, but that isn’t to suggest there aren’t great challenges,” he warned.

One of the perceived challenges of investing in Africa is political risk. Rule indicated that political risk represents “Actions taken by government [that] deprive me of legitimately generated wealth. [But] by that standard, of course, the jurisdiction that I live in, California, is probably one of the riskiest jurisdictions in the world. It’s just that we look at risk differently … risks that look like us, risks that we understand, risks that we participate in creating are regarded as somehow less venal. People will hate to hear this, but I love to say it — money stolen by white people, [speaking] English, according to the rule of law, is just as gone as money that’s stolen more efficiently by traditional methods.”

While Western resource markets may present greater political risk, “Western institutional investors (primarily generalists) have [ironically] painted Africa as a do-not-go[-to] place,” Rule added.

“[But] I think the opportunities are larger than the risks, if you are willing to take those risks,” Rule concluded. “[And] what appeals to me are the exploration companies … the companies that can take exploration concepts (and social risk) … and discover very large deposits.”


Sprott U.S. Media, Inc. is a wholly owned subsidiary of Sprott Inc., which is a public company listed on the Toronto Stock Exchange and operates through its wholly-owned direct and indirect subsidiaries: Sprott Asset Management LP, an adviser registered with the Ontario Securities Commission; Sprott Private Wealth LP, an investment dealer and member of the Investment Industry Regulatory Organization of Canada; Sprott Global Resource Investments Ltd., a US full service broker-dealer and member FINRA/SIPC; Sprott Asset Management USA Inc., an SEC Registered Investment Advisor; and Resource Capital Investment Corp., also an SEC Registered Investment Advisor. We refer to the above entities collectively as “Sprott”.

The information contained herein does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.

Forward-Looking Statement

This report contains forward-looking statements which reflect the current expectations of management regarding future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, and similar expressions have been used to identify these forward-looking statements. These statements reflect management’s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this document. These factors should be considered carefully and undue reliance should not be placed on these forward-looking statements. Although the forward-looking statements contained in this document are based upon what management currently believes to be reasonable assumptions, there is no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and Sprott does not assume any obligation to update or revise.

Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any fund or account managed by Sprott. Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any fund or account managed by Sprott will be invested.

Past performance does not guarantee future results. The views and opinions expressed herein are those of the author’s as of the date of this commentary, and are subject to change without notice. This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.

Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.