World’s No. 3 Gold Miner Sounds Cautious Note on Deals
(Bloomberg) -- AngloGold Ashanti Ltd.’s acting Chief Executive Officer Christine Ramon said the world’s No. 3 gold miner won’t be rushed into deals as the industry braces for another round of mergers and acquisitions.
AngloGold won’t focus on scale for “the sake of it,” Ramon said during a panel discussion alongside the CEOs of Barrick Gold Corp. and Sibanye Stillwater Ltd., both proponents of consolidation. Barrick and Newmont Corp. led a wave of mega deals two years ago and there are expectations that miners, flush with cash, will again look to expand through acquisitions.
“It’s important that you do have critical mass, scale to fund yourself, and to have the capabilities within your portfolio to keep driving that value,” Ramon said. “We have that already. We have got significant optionality in our portfolio so we don’t have to do deals every two years to buy optionality.”
Ramon said the Johannesburg-based miner won’t be distracted by talks of deals, less than a week after her counterpart at Sibanye, Neal Froneman, suggested both AngloGold and Gold Fields Ltd. would fit in his company’s acquisition strategy. Barrick CEO Mark Bristow said building scale and a global footprint helps gold companies to manage risk and operational challenges.
Ramon said AngloGold has improved its outlook after selling higher-cost operations in South Africa and Mali and boosting reserves through spending on exploration at projects in Colombia. The miner has responsibility to its shareholders through dividend payouts and safeguarding equity value, but also to its employees and the communities around its mines, she added.
While AngloGold has shifted focus to more lucrative operations in Africa, Australia and the Americas, the company retains its primary listing on Johannesburg’s stock exchange. The risk perception attached to South Africa has weighed down the stock’s valuation relative to global peers, fueling speculation AngloGold could become a takeover target.
“Consolidation offers marginal gains, so for us it’s far more important not to get distracted from our core focus on the quality of the portfolio,” Ramon said. “We are really focused on driving value and charting sustainable shareholder returns from our existing portfolio.”
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