South African miners
South African mining stocks soared in the first half of 2016. The uptrend was mainly driven by rising gold prices through a stronger US dollar (UUP) (USDU) and a weaker South African rand. But after that, the strength in the rand and a general weakness in gold prices took their toll on miners’ performances.
South African miners’ performances
The above graph shows the 2016 price movement for South African gold companies. On a year-to-date (or YTD) basis, as of December 16, 2016, Harmony Gold Mining (HMY) has risen 78.0%. That’s higher than the 35.0% rise in the VanEck Vectors Gold Miners ETF (GDX) in the same period.
Gold prices have risen 5.0%. But after an exceptional run in the first half of the year, miners have given up much of their gains. Sibanye Gold (SBGL) has risen just 7.0%, AngloGold Ashanti (AU) has risen 27.0%, and Gold Fields (GFI) has fallen 8.0% YTD.
Harmony’s outsized leverage due to higher costs saw it outperforming its peers for most of the year. AngloGold, on the other hand, saw a significant reduction in debt, which encouraged investors to invest in the stock, leading to gains.
In this series, we’ll compare these four miners on various parameters such as geographical exposure, production growth potential, cost performance, financial leverage, and analyst ratings. We’ll also look at which miners could outperform others this year and beyond, based on their unique traits, fundamentals, and valuations.