[miningmx.com] – ON the face of it the proposed retirement of Graham Briggs from Harmony Gold where he has been CEO for seven years is a highly logical step, afterall, he is (a vigorous) 62 years old.
What’s curious about it is the timing, however.
Amid an increasingly ominous round of gold industry wage negotiations, and a market that is deeply unsympathetic to mining equities, one can’t help feeling Briggs is leaving Harmony in the lurch.
Predictably, his anticipated departure has generated a couple of rumours of which the first is that Briggs’ recommendation that Doornkop, the west Rand mine, be shut was quashed by company chairman, Patrice Motsepe.
Briggs, being the uncompromising sort, and who has overseen in his time at Harmony a string of mine closures, sales, staff cuts, wouldn’t countenance a decision driven by politics rather than mining economics, and therefore resigned.
The other piece of scuttlebug in the market is that Harmony is to be merged or bought and that Briggs has no role to play in the future company.
The ‘mosiac theory’, as it’s described, starts with Sibanye Gold CEO, Neal Froneman’s comments last year that company-wide consolidation in South Africa gold mining was now a necessity, and not just the asset-swapping, fiddling-at-the-edges type either.
Added to this are the changes to the share register in Harmony which sees Allan Gray take a 15.38% stake whilst Motsepe’s African Rainbow Minerals (ARM) remains at about 14.6%.
Including the shares held in Harmony by the New York gold fund Van Eck, some 42% of the company is held in three hands; hands that perhaps believe it’s the right time to work in unison in order to protect one of the last vestiges of the South African gold mining bulwark…
Well, maybe.
It’s also interesting that Allan Gray’s stake in Pan African Gold has grown and that putting the ‘old Harmony’ back together again, or putting the lot into a new, bigger Sibanye (which might be struggling to get a platinum deal away) might make sense.
Would Pan African shareholders agree to such a combination? Again, this is speculative stuff, but it’s worth noting Cobus Loots, Pan African CEO, raised a few eyebrows in his decision to buy Uitkomst coal mine. Where has the old Pan African focus gone? Loots counters the coal mine will drive a fabulous profit for the company.
Incidentally, in this scenario keeping Doornkop open would “… mean someone having to pay for that asset as opposed to closing it and then getting nothing for it in any potential deal,” a source told Miningmx.
It might be boloney, and that Briggs is tired, or at 62 years there’s a mandatory retirement age, or his contract has just wound down. Harmony declined to comment when shown a version of this article prior to publication.
As for Allan Gray, it’s a contrarion investor and is filling up its pockets (and boots) with Harmony Gold that has lost a quarter of its value in the last month. As Froneman told Miningmx earlier today, Harmony is incredibly cheap, to which he added the rider – for a reason).
Time will tell.
