For Harmony Gold shareholders 2018 promises to be interesting, with the results of a study on the $2.6bn Golpu copper and gold mining project due early in the year and CEO Peter Steenkamp talking about options open to the South African-focused gold miner in realising value from the Papua New Guinea deposit.
Harmony has, however, tied its future to SA, with the $300m purchase of the Moab Khotsong mining operation and tailings from AngloGold Ashanti, needing its investors to back a $100m capital raising towards the purchase price in 2018.
Steenkamp spoke of a review of strategies around Golpu it shares with Australian gold miner Newcrest in Papua New Guinea, where Harmony has bought that company out of the Hidden Valley gold and silver mine. The market has begun speculating that Harmony could bring its 14% empowerment partner, African Rainbow Minerals into the project or sell it to the copper-hungry company.
Harmony’s investors are not the only ones contending with important decisions from the boards running gold companies. Sibanye-Stillwater completed 2017 with an audacious R5bn all-share bid for world number three platinum miner Lonmin, cementing its position as a key player in the global supply of platinum group metals.
Gold Fields is grappling with its South Deep mine in what some might see as a last roll of the dice on the R29bn investment, with CEO Nick Holland spearheading a fresh R2bn, five-year approach in tackling the massive ore body that is demanding mechanised mining skills the company has struggled to find and develop.
Most gold companies gingerly feel their way towards growth, conservatively inching forwards, but companies such as Sibanye-Stillwater, which has concluded eight transactions worth more than R45bn in four years, is a clear exception. It has leapfrogged its way up the gold and platinum ladder with bold deals in a dizzying ride for shareholders and analysts who fret about its debt levels.
"2018 should be the year in which Sibanye-Stillwater begins to delever, in our view," said Deutsche Bank analyst Patrick Mann in a note. "Critical to this delever will be the recovery of margins in the South African gold business after a challenging 2017 and the restructuring of Cooke, as well as the beginning of the delivery of the Blitz project at Sibanye-Stillwater. Given the high amount of leverage/net debt, Sibanye-Stillwater has to deliver production growth and margin expansion at the Stillwater mine," Mann said.
Sibanye CEO Neal Froneman made it clear that the focus for the company in the next two years would be to reduce the debt built up in the $2.2bn cash purchase of US palladium and platinum miner Stillwater Mining and that the company was now hunting gold and silver to build its position as a large precious metals producer.
"We forecast the gold sector to see a recovery in free cash flow in 2018 from a depressed level in 2017, driven by both improved margins and reduced project capex [2017 was a particularly capex-heavy year]. Harmony is slightly behind the curve in this regard, with the $300m acquisition of Moab Khotsong pending," Mann said.