Share

Gold bargains gone as Sibanye's deal is unlikely

Johannesburg - The gold market shot up so fast that opportunities to make a big acquisition are now scarce, according to Sibanye Gold.

The South African miner said just two months ago that it wanted to buy a gold-producing asset this year. Now, those doors have closed, according to chief executive officer Neal Froneman.

He is no longer considering acquiring Acacia Mining or Barrick Gold Corporation’s stake in the company.

"That was pre-Brexit. What Brexit did was make it very difficult to find value," said Froneman in an interview with Bloomberg News. "Where there was an opportunity to pay industry norms, that’s now gone."

Gold-mining stocks are in the midst of the biggest rally in decades on the back of higher bullion prices, easy monetary policy and events like the US presidential election and Brexit driving demand for havens. A Bloomberg gauge of the biggest gold companies rallied 144% in 2016.

Froneman was on the lookout for purchases after turning around three aging gold mines in South Africa’s Witwatersrand Basin following Sibanye’s spinoff from Gold Fields in 2013. In May, he said he was optimistic about a deal, but acknowledged that the rally was creating “challenging valuations.”

Brexit boost

After UK citizens decided to leave the European Union on June 23, gold prices ratcheted higher. The Bloomberg index of 14 gold miners is up 19% since the day before the vote.

Gold for immediate delivery was little changed today at $1 334.60 an ounce.

"There’s probably going to be very limited opportunities," he said. "We are not desperate to grow our gold or platinum business."

Sibanye has also benefited from the rally. The shares are at a record after more than doubling in 2016.

The twin boost of higher gold prices and a weaker rand, in which it pays costs, have helped widen profit margins and turn the producer’s aging, previously high-cost operations into mines that are on course to generate R10bn of free cash flow this year.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.96
-0.3%
Rand - Pound
23.95
-0.2%
Rand - Euro
20.47
-0.0%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.3%
Platinum
911.00
+1.6%
Palladium
1,012.02
+1.0%
Gold
2,213.44
+0.9%
Silver
24.79
+0.6%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders