Thursday , April 22 2021

Wild rally in SA's gold giants after 'mega merger' report

  • A Bloomberg headline, indicating more between AngloGold and Gold Fields, sparked a massive rally in the shares.
  • However, the report – which quoted its CEO – was denied by AngloGold.
  • If merger happened, the companies would form the third-largest gold firm in the world.

A Bloomberg headline that seems to be predicting more between AngloGold and Gold Fields causes a rush of excitement on the JSE on Tuesday.

Gold Fields ended up one of the biggest gainers on the bourse, jumping almost 8% after the headline was released, followed by an article that claimed that it wanted to merge with AngloGold. It ended the day almost 4% stronger at R51.06, while AngloGold closed 2.4% higher at R170.

But reports of the mega seem to be exaggerated.

After the JSE closed, Gold Fields released a statement denying the Bloomberg article. The report claimed that Gold Fields would like to work with AngloGold Ashanti, "according to a person familiar with the matter" and then proceeded to report on an interview with Gold Fields CEO Nick Holland. "If you are going to survive in the long term, you are going to have to look at consolidation," Holland is quoted as saying.

In a market note on Tuesday afternoon, Gold Fields said Bloomberg's article is factually incorrect and they "completely disassociate ourselves with this statement".

Gold Fields spokesperson Sven Lunsche said no discussions have taken place, or are considered, regarding a potential merger.

"Nothing is on the table, no discussions whatsoever," Lunsche customs Business Insider South Africa.

He said despite continued losses at Gold Fields' South Deep mine, one of the largest gold mines in South Africa, the company remains committed to its South African operations.

If it happened, it would bring together two miners with a combined market value of about $ 8 billion – the third largest in the world after Newmont Mining and Barrick Gold. The struggling gold sector has seen a number of mergers in recent times.

Aside from its South African operations, Gold Fields operates mines in Ghana, Australia and Peru.

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