[miningmx.com] – CAPE Town-based financial institution Allan Gray is now the largest single shareholder in Harmony Gold beating the heavyweight gold producer’s black economic empowerment partner, Patrice Motsepe’s African Rainbow Minerals (ARM) into second place.
The development is significant in the light of market speculation over Harmony’s future given the way the group’s market capitalisation has collapsed in recent months as well as ARM’s long-standing association with Harmony.
ARM founder and chairman, Patrice Motsepe, is the “non-independent, non-executive” chairman of Harmony and he has maintained a rock-solid commitment to the group despite its poor performance over the past five years.
An announcement from Harmony on Thursday said clients of Allan Gray had built up a total holding of 15.38% in the company. It added that Harmony has “filed the required notice with the Take Over Regulation Panel.”
The announcement gave no further details, but Allan Gray held an 11.1% stake in Harmony at the end of June 2014 while ARM’s stake has remained unchanged at 14.6%. The third largest shareholder in Harmony is now Van Eck Global at 13%. Van Eck Global held just 4.89% at end-June last year.
Miningmx was unable to obtain comment from Allan Gray on Thursday afternoon regarding the strategy behind its move to become the largest shareholder in Harmony but it also took a contrarion stake in African Bank earlier this year – a bet that didn’t work out well for the asset manager.
The main reason for the collapse in the Harmony share price is because a number of the group’s marginal mines are widely viewed as the most exposed to the falling gold price.
It is also seen as the least likely to survive a prolonged strike should that be the outcome of the industry wage negotiations currently underway between the Chamber of Mines and the main South African gold producers.
The group now has a market cap of just R5.5bn compared with R33.4bn for AngloGold Ashanti, R28.1bn for Gold Fields, and, significantly, R16.7bn for Sibanye Gold.
It’s significant because Sibanye CEO, Neal Froneman, has made no secret of his ambitions to grow through consolidation and now would seem to be a good time to make a move on Harmony given the value of his equity.
Many of Harmony’s mines would make a good “fit’ with Sibanye’s operations on both the Far West Rand and the Free State allowing scope for rationalisation of operations and cost-cutting.
It seems some market observors are keeping a close watch on the share registers of both Harmony and Sibanye where the latest statistics on Sibanye’s web site show that Allan Gray holds 9.98% of the company and Van Eck Associates 5.07%.
