SA gold miners set for more overseas deals

JOHANNESBURG – A rising tide of global deals are expected among South African gold producers, stung by a strong rand at home, in the wake of Gold Fields’ admired swoop on Canada’s Iamgold.

Harmony, the only major South African gold miner with the bulk of operations at home, is now under renewed pressure to follow rivals and hunt out some big overseas acquisitions, analysts and fund managers said. “It is definitely a market where a lot is happening,” said fund manager Patrice Rassou at Old Mutual Asset Managers in Cape Town.”The South African operating environment is becoming a very hostile one.”Gold Fields, the fourth biggest gold producer, unveiled plans on Wednesday to take control of Iamgold and inject its international operations in a new vehicle listed in North America and renamed Gold Fields International.Investors cheered the deal, sending Iamgold shares soaring 12 per cent on Wednesday and lifting Gold Fields stock by 2,4 percent yesterday by 1110 GMT, outperforming a 1,3 per cent gain in the gold index Most South African gold miners have been on the prowl for overseas assets as a rampaging rand, one of the best performing currencies in the world, slashes export earnings and pushes lower-quality mines into the red.They have been seeking out junior gold miners, with analysts seeing little chance of more huge deals at the moment after AngloGold swallowed Ghana’s Ashanti earlier this year.More acquisitions were expected of the sort world number two AngloGold Ashanti made last month by buying up around 30 per cent of Russia’s Trans-Siberian Gold.Russia’s Norilsk Nickel, which bought a 20 per cent stake in Gold Fields in March, is likely to find the new Gold Fields International an attractive vehicle to spin off its gold assets into, analysts said.Harmony, with 90 per cent of production based in South Africa, has been slammed by the rand, posting a much deeper headline loss of 131 cents per share in the fourth quarter.Harmony has projects in Papua New Guinea, including one expected to produce 300,000 ounces of gold a year, but this will not start producing for a couple of years.At the same time, rivals Gold Fields and AngloGold already have a third and half of operations overseas respectively and are scrambling to grab more assets.Harmony may have no choice but to focus on what has been its speciality, being a turnaround specialist for South African assets divested by rivals, he added.- Nampa-Reuters”It is definitely a market where a lot is happening,” said fund manager Patrice Rassou at Old Mutual Asset Managers in Cape Town.”The South African operating environment is becoming a very hostile one.”Gold Fields, the fourth biggest gold producer, unveiled plans on Wednesday to take control of Iamgold and inject its international operations in a new vehicle listed in North America and renamed Gold Fields International.Investors cheered the deal, sending Iamgold shares soaring 12 per cent on Wednesday and lifting Gold Fields stock by 2,4 percent yesterday by 1110 GMT, outperforming a 1,3 per cent gain in the gold index Most South African gold miners have been on the prowl for overseas assets as a rampaging rand, one of the best performing currencies in the world, slashes export earnings and pushes lower-quality mines into the red.They have been seeking out junior gold miners, with analysts seeing little chance of more huge deals at the moment after AngloGold swallowed Ghana’s Ashanti earlier this year.More acquisitions were expected of the sort world number two AngloGold Ashanti made last month by buying up around 30 per cent of Russia’s Trans-Siberian Gold.Russia’s Norilsk Nickel, which bought a 20 per cent stake in Gold Fields in March, is likely to find the new Gold Fields International an attractive vehicle to spin off its gold assets into, analysts said.Harmony, with 90 per cent of production based in South Africa, has been slammed by the rand, posting a much deeper headline loss of 131 cents per share in the fourth quarter.Harmony has projects in Papua New Guinea, including one expected to produce 300,000 ounces of gold a year, but this will not start producing for a couple of years.At the same time, rivals Gold Fields and AngloGold already have a third and half of operations overseas respectively and are scrambling to grab more assets.Harmony may have no choice but to focus on what has been its speciality, being a turnaround specialist for South African assets divested by rivals, he added.- Nampa-Reuters