Photographer: Simon Dawson/Bloomberg

AngloGold Puts Mine Spending Over M&A Deals as Profits Rebound

  • Reef-boring technology is starting to turn profitable: Pityana
  • AngloGold shares rallied 44 percent in 2016 as gold rebounded

AngloGold Ashanti Ltd. plans to focus on extracting more metal out of its existing mines, rather than using deals to expand.

“We have a lot on our portfolio that we can draw from to increase production,” said Chairman Sipho Pityana at the World Economic Forum in Davos, Switzerland. “That’s what the priority is going to be, and in the overall rankings, mergers and acquisitions would therefore be lower down on our list.”

That contrasts with a recent spate of deals in the gold industry as producers benefit from rising metal prices and rebounding profits. Shares of AngloGold, the world’s third-largest miner of the metal, rallied 44 percent last year, the biggest increase in a decade.

Deals in the gold industry include Sibanye Gold Ltd. agreeing in December to pay $2.2 billion for Stillwater Mining Co., a Montana-based platinum and palladium producer. Acacia Mining Plc, which mines in Tanzania, confirmed earlier this month that it’s in talks with Endeavour Mining Corp. about a possible merger.

AngloGold will aim to increase production at operations in Australia, Pityana said. He also cited operations in Brazil and Guinea as targets for expansion, and brownfield projects, meaning growth at existing mine sites.

“We’ve given a signal to management that we are happy to commit more capital and see our capex increasing,” Pityana said.

AngloGold’s reef-boring technology, a highly mechanized way of deep-level mining, has started to turn profitable, he said. The equipment is designed to extend the life of precious metal mines.

— With assistance by Kevin Crowley

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