Which South African Gold Miner Has Received an Upgrade?


Nov. 20 2020, Updated 3:27 p.m. ET

Ratings changes post acquisition

Sibanye Gold (SBGL) entered into an agreement with Stillwater Mining (SWC) to acquire all its stock in December 2016. While Sibanye’s management is quite positive about this development, we’ll see how analysts are viewing this transaction.

Commenting on the Sibanye Gold–Stillwater Mining (SWC) deal, UBS said, “By Sibanye’s own admission, the valuation paid for Stillwater’s operating assets looks full.” UBS added that the market might not be factoring in the upside from the Blitz project.

J.P. Morgan Cazenove described this offer as “a very full price.” It also said that Sibanye would need to repay a debt of $865.0 million to return the company to a comfortable net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio of 1.5x.

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AngloGold’s ratings changes

AngloGold Ashanti (AU) reported on February 2, 2017, that it expects to report a profit in 2016 after losing money in 2015. As far as recent analyst sentiment is concerned, HSBC downgraded AU from “buy” to “hold” while simultaneously reducing its target price from 208 South African rand to 165 South African rand on January 27, 2017.

On the other hand, it’s among RBC Capital Markets’ favorite picks. It falls within its purview of companies with “attractive margins, solid balance sheets, organic growth opportunities and a consistent operating strategy.”

Harmony Gold and Gold Fields

On February 3, 2017, HSBC raised Harmony Gold’s (HMY) target price from 34 South African rand to 35 South African rand.

HSBC lowered Gold Fields’ (GFI) target price from 61 South African rand to 43 South African rand and downgraded it from “hold” to “reduce” on January 27, 2017.

RBC Capital Markets downgraded GFI from “outperform” to “sector perform” on December 12, 2016.

Gold miners (GDX) will release their earnings in the next few weeks. For an analysis of their latest results, be sure to watch Market Realist’s Precious Metal Mining page.


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