MIIF to launch gold-backed ETF

The Minerals Income and Investment Fund (MIIF) is actively working on launching a physical gold-backed Exchange Traded Fund (ETF), set to be listed by the fourth quarter of 2024 according to MIIF’s Chief Executive Officer, Edward Nana Yaw Koranteng.

“The ETFs will be backed by physical gold bullion held in secure vaults. Investors in these ETFs will own shares that represent a portion of the underlying gold held by the Fund,” the CEO said.

“This ETF will provide investors with exposure to the price movements of gold without needing to physically buy, store and secure the metal themselves,” Mr. Koranteng added.

Gold for the ETF will come from MIIF’s Small-Scale Gold Mining Incubation Programme, which emphasises sustainable mining practices and traceability mechanisms to secure gold dore from licenced small-scale gold mining companies.

He said that criteria for sustainably mined gold include environmental impact, social responsibility, compliance with regulations and transparency.

“These criteria are not exhaustive, and the specific criteria used by MIIF may vary,” he told the B&FT.

The MIIF gold-backed ETF is expected to be listed on Ghana Stock Exchange (GSE) before end of 2024, marking a significant development for the country’s gold industry. Once accomplished, this will be the second gold-backed ETF on the GSE.

However, Mr. Koranteng mentioned that the timeline for listing on the GSE may vary due to several factors including regulatory approvals, market conditions and logistical considerations.

“MIIF has appointed transaction advisors to oversee and execute the listing process. These advisors are responsible for structuring the ETF, conducting due diligence, preparing regulatory filings and coordinating with regulatory authorities and market participants,” he said.

Moreover, he hinted that: “Regarding potential challenges, regulatory approval processes can sometimes be time-consuming and MIIF may need to address any regulatory concerns or requirements raised by the SEC and the GSE”.

Additionally, he said logistical challenges related to market infrastructure, trading systems and investor readiness may need to be overcome to ensure a smooth listing process.

Given this, he said, “the overall, careful planning, regulatory compliance and effective execution are essential to navigate potential challenges and ensure a successful listing hopefully by October 2024”.

This announcement by MIIF, reiterated by the CEO during the listing of Atlantic Lithium – one of the shareholding companies of the Fund – on the GSE, highlights renewed efforts to leverage gold resources to attract investors and diversify the local economy.

To ensure credibility and transparency of the ETF, Mr. Koranteng indicated that MIIF will implement several measures, including publicly listing the ETF, subjecting it to regulatory scrutiny and investor expectations, and promoting transparency in its operations and disclosures.

“MIIF is also engaging reputable transaction advisors, custodians, and banks with expertise in commodity markets, ETF structuring, bullion trade, and custody to ensure that the ETF’s operations adhere to best practices, regulatory requirements, security protocols, and regular audits, providing assurance regarding the vaulting, safekeeping, and authenticity of the gold assets backing the ETF.

“MIIF will employ independent reporting accountants and auditors to review the ETF’s financial statements and operational processes to enhance transparency and provide investors with confidence in the accuracy and integrity of the reported information,” he stated.

By leveraging these measures and engaging with trusted partners, he believes that MIIF will enhance the credibility and transparency of its gold-backed ETF.

Commenting on the Fund’s motivation to pursue this initiative, he said: “A gold-backed ETF provides investors with an alternative asset class, diversifying their investment portfolios. Gold is traditionally considered a store of value and a hedge against inflation and currency depreciation, making it an attractive investment option especially during times of economic uncertainty or market volatility.”

MIIF believes that developing a gold-backed ETF will contribute to beneficiation along the entire value chain of mining in Ghana by creating a market for gold-backed financial products.

“Linking the gold-backed ETF to small-scale mining initiatives will facilitate capital creation to support the formalisation of small-scale mining operations in Ghana and provide access to financing and investment opportunities,” Mr. Koranteng added.

It is understood that MIIF is implementing several measures to ensure the environmental and social sustainability of its Small-Scale Gold Mining Incubation Programme, from which the gold assets will be sourced.

These measures, according to MIFF, are guided by an Environmental, Social and Governance (ESG) framework which governs the selection of firms to invest in and the sourcing of gold.

The investment aims to provide exposure to the gold market through a cost-effective and transparent vehicle that replicates gold price performance. Detailed information is expected to be available in the IPO prospectus.