AngloGold Ashanti’s top brass, chair Maria Ramos and CEO Alberto Calderon, have set their sights on closing the valuation gap between the group and its peers, mainly gold mining houses in Canada, Australia and the US.
Gold is AngloGold Ashanti’s principal product. Silver and sulphuric acid are by-products at its Argentinian and Brazilian operations respectively.
The Johannesburg-based group is now valued at just less than R160bn on the JSE.
Calderon said in the group’s annual report released on Friday that in an industry characterised by expensive deal-making to fill project pipelines, the group’s ability to add ounces is an invaluable competitive advantage.
“I have been clear since joining AngloGold Ashanti at the end of 2021, that achieving a sustainable turnaround of the company and narrowing the valuation gap with our peers, would take two to three years. I remain firmly of that view as we enter this transitional year — one in which we will consolidate the learning from our full asset potential rollout and execute on the opportunities it identified,” he said.
“We have excellent attributes; a world-class team, a strong bench of skilled and committed people, a world-class portfolio chock-full of potential, and a robust balance sheet to fund our investments and weather market volatility.”
American gold mining company Newmont Corporation is now the most valuable gold mining group valued at $38bn with Canadian firm Barrick Gold worth $31.7bn.
Potential merger
Australian group Newcrest is worth 21.6bn Australian dollar. Closer to home, Gold Fields is valued at R186bn and Sibanye-Stillwater R105bn.
Newmont, which recently poached Anglo American Platinum’s CEO Natascha Viljoen, is in negotiations with Newcrest over a potential merger. Should the deal go through, it will create a $54bn behemoth.
Gold mining companies are valuable because they produce safe-haven metal and investors buy gold to hedge against risks such as rising inflation, geopolitical events, and financial crises, which can cause the price of gold to be volatile.
AngloGold Ashanti’s exploration activities have proven to be a success with the company last month reported that its mineral reserve additions in 2022 exceeded depletion for the sixth consecutive year.
The group’s Obuasi gold mine in Ghana met targeted production of 250,000oz as it continues on the ramp-up path to its full production run rate in excess of 400,000oz, which is expected by the end of 2024.
Gold production for the full-year period stood at 2.74-million ounces, an 11% improvement on the prior year.
Ramos, who replaced Sipho Pityana as the group’s chair in 2020, said the mandate of the executives is clear, and that is to regain cost competitiveness safely and responsibly versus the peer group.
She added that progress made in 2022 stood the group in good stead to meet its objectives.
Route markers
“While these achievements are route markers in the journey to improve AngloGold Ashanti’s valuation, we have some way to go to narrow the deficit with our peer group. While our CEO, Alberto Calderon, has been clear that 2023 is a transitional year as we move towards narrowing the valuation gap with peers, we will continue to invest in improving the quality and integrity of the portfolio.”
The group in 2020 sold its last SA mining assets to Harmony Gold for about R4.4bn. While it no longer has any operations left in SA, it remains listed on the JSE and has its head office in the country. The mining house is also listed in the New York, Australia and Ghana stock exchanges.
The group under Ramos and Calderon have made a few corporate moves in the past three years, including the $365m acquisition of Corvus Gold in 2022. The Corvus assets, North Bullfrog and Mother Lode are located in the Beatty district, southern Nevada.
Gold Fields and AngloGold Ashanti last week announced a joint proposed joint venture in Ghana. The joint venture will bring together Gold Fields’s Tarkwa Mine and AngloGold Ashanti’s Iduapriem Mine, both of which are located near the town of Tarkwa in western Ghana.
This will create Africa’s largest gold mine with an estimated life of 18 years. Calderon quickly shot down speculation that the joint venture opened the door for a possible merger, amid consolidation in the gold-mining industry.
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