AngloGold Ashanti Ltd. has had a foul yr, with the corporate’s lack of a everlasting chief government officer and a suspension of its Ghana mine operations weighing on the inventory. However with shares now low cost in contrast with friends, analysts see potential for upside.
Shares of the world’s third-largest gold producer have dropped 30% prior to now yr, making it the worst-performing inventory within the 113-company Bloomberg World Mining Index. It additionally trails friends on South Africa’s FTSE/JSE Treasured Metals and Mining Index, which has gained 20% in the identical interval.
Investor sentiment started to bitter three days after the corporate’s shares rose to a report on July 27. That’s when AngloGold’s CEO Kelvin Dushnisky shocked stakeholders by asserting his resignation. The inventory on Tuesday fell to the bottom since March 2020, and trades at a ahead price-to-earnings ratio of 8.5 occasions in contrast with 10.8 for the Bloomberg mining index.
“AngloGold is an efficient turnaround inventory at this level, being one of many least expensive giant cap gold shares globally,” stated Bloomberg Intelligence mining analyst Grant Sporre. Appointing a CEO and resuming mining operations in Ghana,“would all be optimistic catalysts and could also be sufficient for the inventory to play catch as much as friends, even when gold costs have been to flatline.”
5 months after the CEO introduced his determination to resign, the corporate’s chairperson give up and in Could it needed to droop operations at its Ghana mine following an accident.
The corporate’s transfer to spice up its dividend fivefold earlier this yr hasn’t helped the shares. The important thing set off for buyers would be the appointment of a everlasting head, in response to Raj Ray, director of metals & mining analysis at BMO Capital Markets. Interim CEO Christine Ramon has been operating the corporate since Dushnisky give up final yr.
The seek for a everlasting CEO is a “high precedence for the board, which is fully-focused on securing the perfect candidate for the function,” Chris Nthite, a AngloGold spokesman, stated in an e-mail on Tuesday.
Whereas AngloGold is but to determine on its CEO, rival Gold Fields Ltd. has had a clean transition. It named former Anglo American Platinum Ltd. boss Chris Griffith as head, to succeed Nick Holland. Gold Subject’s shares have gained 13% prior to now yr.
Many analysts stay sanguine. AngloGold’s recommendation consensus — a gauge of analyst confidence in a inventory on a scale of 1 to five — stands at 3.7, up from 3 in August final yr. 9 analysts forecast the corporate’s shares will rise a median 27% within the subsequent 12 months, in response to knowledge compiled by Bloomberg.
AngloGold’s share value is poised to rise even when gold costs fall, stated Rene Hochreiter, an analyst at Johannesburg-based Noah Capital Markets. That’s as a result of “the corporate is making fairly a pleasant revenue,” so the goal value needs to be about 30% increased, he stated.
Nonetheless, buyers will likely be assessing the corporate’s capability to get its key Obuasi mine in Ghana again on observe, after the operations have been suspended final month following the loss of life of a miner in a fall-of-ground incident.
Whereas the suspension will curb AngloGold’s 2021 output, the corporate is doing an “evaluation of the mine design, mine schedule and floor administration plans,” earlier than resuming manufacturing in a phased method, Nthite stated, with out giving a timeline.
AngloGold has spent about $545 million redeveloping the Ghanaian operation.
The corporate additionally has different challenges. It’s battling to repatriate greater than $461 million of its revenue from the Democratic Republic of Congo, and resolve challenges with worth added tax with the federal government in Tanzania.
In the meantime, bullion’s retreat from the best degree since January will imply that AngloGold could proceed to underperform rivals, stated Anchor Capital Funding’s analyst Seleho Tsatsi.
— With help by Felix Njini