AngloGold Ashanti is looking at options to dispose of its remaining assets in SA, arguing that investments needed to extend their lives would secure better returns elsewhere in the portfolio.
AngloGold, the world’s third-largest gold mine, has extensively restructured its SA portfolio, selling mines to Harmony Gold and others, leaving it with a single underground mine at Mponeng and two surface operations.
The Mponeng mine needs a large capital investment in the next few years to deepen the mine, but it is competing against other investments that have better returns in shorter time frames.
“We believe that under the right ownership, our SA assets offer a compelling long-term value proposition that may allow for an extension to Mponeng Mine’s current life,” CEO Kelvin Dushnisky said.
“The investment to extend Mponeng’s life beyond eight years has very strong competition for capital and other scarce resources from a host of other projects in our portfolio, which at current planning assumptions are more attractive, generating higher returns and quicker payback periods,” he said.
The funds raised from any sale would be put towards repaying debt and investments in other assets as well as returns to shareholders, he said.
SA has become increasingly unattractive as a deep-level mining investment, with electricity prices rising by more than 530% in a decade and set to increase by another 30% over the next three years.
In the future there could be a decision to move the primary listing away from Johannesburg.
Mponeng has a life of eight years if there is no further investment but it needs another large injection of capital to give it a much longer life, but Dushnisky said the internal financial metrics that he was unwilling to disclose on a media call showed that it would not clear the group’s investment targets.
Gold Fields unbundled its three deep-level gold mines in 2013 to form Sibanye-Stillwater, focusing on its international asset portfolio.