MIIF, GSE to introduce first domestic gold-backed ETF by Q3

The Mineral Income Investment Fund (MIIF), together with the Ghana Stock Exchange (GSE), will introduce the first domestic gold-linked Exchange Traded-Fund (ETF) by the end of the third quarter, Chief Executive Officer of MIIF Edward Nana Yaw Koranteng has announced.

He disclosed this at the signing of a Memorandum of Understanding (MoU) between MIIF and the Accra bourse, where he indicated that the instrument would be backed by sustainably mined gold from the fund’s small-scale mining incubation programme, to be launched in the first half of the year.

“We hope to introduce the gold-backed ETFs by September this year… The MIIF gold ETF will be structured with gold as the principal underlying asset, for which the security will track the price of gold… We find the listing of a Ghanaian ETF by MIIF extremely exciting and definitely a game-changer,” Mr. Koranteng said at the event.

Speaking exclusively with the B&FT on the sidelines of the same event, the MIIF CEO said the domestic ETF is anticipated to have a market capitalisation which exceeds that of the only gold-backed ETF on the market – Absa’s NewGold ETF, which at the middle of the fourth trading week in March has 2.9 million outstanding shares and market capitalisation of GH¢679million.

“It is early days yet and the numbers are subject to our investment pipeline, but we expect it to be more than the ETF that is currently listed,” he said.

The development is expected to increase Ghana’s – Africa’s largest gold producer – participation in this asset class, which had in excess of US$200billion in assets under management (AUM) at the end of 2022, while providing an additional window for institutional and retail investors.

Plans to increase the listing of mining companies

Additionally, MIIF has revealed plans to list small-scale mining companies under the MIIF incubation programme on the alternative exchange. This is in line with its efforts to develop mining juniors and mid-tier Ghanaian mining companies, which the CEO referred to as “Ghanaian mining champions”.

The move is part of MIIF’s broader strategy to support sustainable and responsible mining practices in the country, and to enhance the growth and competitiveness of the local mining industry. By listing these companies on the alternative exchange, MIIF hopes to provide them with greater access to funding and investment opportunities while also raising their visibility and profile in the market.

“The listing of these companies on the alternative exchange could also provide retail investors with the opportunity to invest in the mining industry and contribute to the development of the sector in Ghana. This could ultimately lead to the creation of more jobs and the growth of the local economy,” Mr. Koranteng added. He also cited the paucity of representation of the mining industry on the GSE.

“For the mining sector in Ghana, without long-term capital, our dream to leverage the minerals for shared prosperity will continue to be a stuttering dream garnished with illegal mining activities,” he said.

Already, the fund has indicated that plans are underway to get Atlantic Lithium, developers of the resource-rich Ewoyaa project in Mankessim as well as an unnamed domestic salt player to list on the local bourse.

“We already have Asante Gold on board and we are in discussions with a lithium company to list on the stock exchange. We are also looking at a local salt entity, and this entity has the potential to be sub-Saharan Africa’s biggest salt company,” Mr. Koranteng noted.

On her part, the Managing Director of the GSE, Abena Amoah, said the partnership forms part of a deliberate strategy to get more mining companies to list on the exchange to deepen the local capital market.

“You will agree with me that having only two mining companies listed on the exchange is not a good reflection of Ghana’s position as the largest producer of gold in Africa. Nor does it reflect the broad and profitable mineral assets in Ghana – ranging from salt, lithium, manganese, bauxite, among others. Again, the amount of local wealth invested in this sector in which Ghana has a competitive advantage is relatively small,” she said, adding that the Accra bourse is working to add more mineral-backed instruments in the medium term.

The Director-General of the Securities and Exchange Commision (SEC), Daniel Ogbarmey Tetteh, welcomed the partnership, saying it is a key step in the regulator’s efforts to build a more robust capital market.

For context, there are more mining companies operating in Ghana listed on the Toronto Stock Exchange (TSX) than on the GSE. Out of 16 mining companies operating in the country, only two are listed on the GSE.

In contrast, the TSX has over 1,500 mining companies listed, which make up 40 percent of the world’s public mining companies. The TSX has a market cap of US$4.3trillion, compared to the GSE’s US$5.4billion.