AngloGold Ashanti Ltd. Chief Executive Mark Cutifani sees splitting off the producer’s South African mines as a viable option, while it doesn’t necessarily offer the best value for all shareholders.
“There’s no doubt it will release value for the non-South African assets, but what do you do to the South African assets at the same time?” Cutifani said in an interview today. The option is “one that we haven’t considered as the best option.”
Billionaire investor John Paulson, whose hedge fund is the biggest shareholder in AngloGold, the world’s third-largest producer of the precious metal, said the company might increase in value if it were to split its business between South African assets and operations outside the country.
Strikes and unrest last year cut South African mining output by 10.1 billion rand ($1.1 billion), costing tax revenue, exports and jobs, according to the National Treasury. AngloGold, which digs about a third of its metal in the country, today reported a 29 percent drop in 2012 profit after a strike that shut its South African mines cut production.
“If it releases value in terms of giving shareholders a choice, then you have to consider it,” said Cutifani, who leaves the Johannesburg-based company in April to become CEO of Anglo American Plc. “We don’t see a big value uplift.”
Industrial unrest and above-inflation pay gains were partly behind the decision by Gold Fields Ltd. to spin off some of its South African assets. Sibanye Gold Ltd. was listed in Johannesburg and New York on Feb. 11.
“In terms of a broader portfolio conversation, the board and the executive are continuing to go through options, looking at possibilities,” Cutifani said in an earlier conference call today. “Everybody’s watching the Gold Fields performance and seeing how they’ve gone. And so we’re in that process.”