Johannesburg - Shares of Sibanye Gold, a new company hived
off from the world's fourth-largest bullion producer, Gold Fields [JSE:GFI],
opened on Monday at R13.05, near the bottom end of market expectations.
Analysts had expected the shares to trade anywhere from R8
to R52, so its debut will hardly inspire other major South African gold
producers such as AngloGold Ashanti [JSE:ANG] to follow suit.
Gold Fields shares fell nearly 12% to R94.00, a drop that
roughly mirrored the value of the new entity.
Gold Fields is spinning off two of its three South African
mines, both of which were hit by labour unrest last year. It is holding on to
its South Deep mine, which has avoided recent labour conflict due to its high
level of mechanisation.
By unloading the older assets, Gold Fields hopes to make
itself more attractive to investors who are uncomfortable with the labour risk
associated with South Africa. Other companies could eventually follow suit.
South Africa was pounded by waves of violent labour unrest
last year that started in the platinum industry and spread into gold, diamonds
and later trucking and agriculture.
More than 50 people were killed, hitting investor confidence
and raising questions about President Jacob Zuma's management of the
continent's biggest economy.
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