TAKEOVERS
SA discount makes gold mines targets
What has changed in recent years is the rate of exodus from SA, as companies either sold or closed gold mines as operations aged
SA’s large gold companies have and will pare their exposure to SA to the minimum as their international assets become their core focus and could open them to takeovers. The trend in the flight to offshore assets is not sudden, with companies like AngloGold Ashanti and Gold Fields building international portfolios using cash flows from their SA mines to make them serious players on the international stage, with the former long holding on to its position as the world’s third-largest gold miner. What has changed in recent years is the rate of exodus from SA, as companies either sold or closed gold mines as operations aged, sank into unsustainable losses because of continued above-inflation electricity and wage increases, and board decisions of where to invest growth capital increasingly excluded SA. Electricity and wages, the biggest cost elements on gold mines, contributed to the closure of marginal mines, while an uncertain regulatory environment, coupled with years of upheaval in th...
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