The other day there was a call to create a “gold production champion” listed on the Johannesburg Stock Exchange (JSE) by merging AngloGold Ashanti, Gold Fields and Sibanye.
South African newspaper Business Day quoted Sibanye-Stillwater CEO Neal Froneman as saying that consolidating the three gold miners would serve South African interests.
Gold Fields CEO Nick Holland and Acting AngloGold CEO Christine Ramon declined to comment on Froneman’s bold proposal.
Business Day said in an editorial that Fronemann’s idea was “brilliant.”
“It would give the company the geographic diversity it so desperately needs outside of South Africa to play with the big boys, and allow it to compete for the world’s number one gold producer at a time when it holds the top spot. as the main, primary supplier of platinum group metals, ”the editorial says.
“But will the boards of directors of AngloGold and Gold Fields recommend such a deal to shareholders after both companies have spent decades building their large offshore assets and have effectively severed all production ties with South Africa, with the exception of Gold Fields’s South Deep mine? country? ” – the newspaper asks.
Business Day itself answered its own question, expressing the opinion that the shareholders of both companies are unlikely to want to combine the three complexes of deep gold mining within the framework of Sibanye, mixing their products with the products of its new underground mine, Burnstone, because it has a cost of an average of almost $ 350 per ounce higher than AngloGold, which produces the metal at $ 1059 per ounce.
“Both companies are pumping money in and embarking on growth projects. Undoubtedly, both are world class companies, ”reads the editorial.
“So what is the benefit for AngloGold, the world’s third-largest gold producer, or Gold Fields, the sixth-largest gold producer, from being linked to the peer-to-peer Sibanye?” Business Day writes.
“Beyond size, would there be any advantage to being inextricably linked to a company that has all of its gold assets in South Africa, a jurisdiction that international investors are wary of and where the more expensive mines are? – the newspaper continues. – Fronemann would have to give some kind of argument in defense of his position, if his plans receive at least some support. Judging by his comments, he wants a South African gold miner in the guise of a world champion who can compete with two giants in the US and Canada – Newmont Goldcorp and Barrick Gold, respectively.
