Firms ‘to purge more mines’ as they chase margins

2014-08-03 11:40

AngloGold Ashanti expects the top mining firms to put more assets on the block as they seek to bolster margins ahead of a forecast slump in prices.

The largest companies have shed $912 million (R9.7 billion) of unwanted mines in the past 12 months after gold last year notched up its biggest annual drop in more than three decades.

Graham Ehm, AngloGold executive vice-president for planning and technical, said operations remained under review for potential sales or spin-outs, with the metal seen more likely to decline than to advance beyond $1?400 an ounce.

Goldman Sachs sees gold sliding to $1?050 an ounce by the end of the year, while Australia & New Zealand Banking Group is forecasting $1?180 an ounce, citing weaker demand in China, the biggest consumer.

Mining investor QKR, founded by former JPMorgan Chase banker Lloyd Pengilly, last month completed the $110?million purchase of AngloGold’s Navachab mine in Namibia.

With operations across 10 countries, AngloGold may consider potential sales of assets, including Obuasi in Ghana, Sadiola in Mali or Colombia’s La Colosa, according to David Davis, an analyst at Standard Bank’s securities unit. – Bloomberg

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