Why hasn’t Neal Froneman made a knockout bid for AngloGold Ashanti? That’s out of character

Neal Froneman, Sibanye-Stillwater CEO

IT’S curious that Sibanye-Stillwater hasn’t made a bid for AngloGold Ashanti.

Still without a permanent CEO, and with a share price that underperformed many of its peers for most of 2020, AngloGold ticks many of the boxes in a company that Sibanye-Stillwater CEO, Neal Froneman, said he scouting for in his next gold M&A.

AngloGold doesn’t have a preponderance of assets in South Africa (none at all after October) or central Africa (only the very rich stake in the Congo’s Kibali held in joint venture with Barrick Gold). It also has a market capitalisation that is vulnerable to gold industry consolidation which Froneman considered an inevitability.

“There is absolutely no doubt in my mind that consolidation is necessary. It is going to happen,” he said at the firm’s year-end presentation last month.

“You’re either going to be consolidated or you can drive consolidation. You have to become relevant. Even at $13bn, we’re still not relevant. We need to be at least $20bn plus.” Sibanye-Stillwater is valued at $14.3bn.

He added: “We’ve done very smart M&A. And of course what’s only visible is what we’ve done. We’ve walked away from many opportunities as well which are not well known.”

Asked in an interview with Miningmx if an approach to AngloGold Ashanti was one of the transactions that were not well known, Froneman replied: “We looked at AngloGold a long time ago before Randgold merged with Barrick”. That must have been circa 2018 or 2019.

AngloGold has assets in the Americas, where Sibanye-Stillwater is now firmly established, and Australia, as well as ‘Continental Africa’ in places like Tanzania. Given its stake in Kibali, an equally relevant question would be whether Barrick Gold hadn’t made similar inquiries to those Sibanye-Stillwater made a few years ago?

Certainly, Barrick has run the rule on AngloGold. Mark Bristow, CEO of Barrick Gold, said in an interview with Miningmx last month that there was some logic to taking out AngloGold’s 40% stake in Kibali gold mine. “From a technical perspective, the best assets to prioritise are those you hold in a joint venture,” said Bristow.

But he added: “At the same time, running a process into South Africa … I’m not sure that is appropriate strategy”. Barrick had stepped back from M&A activity, and stopped short of revisiting its dividend strategy, until there was more visibility on how the gold price might go, he said.

It’s odd, though, that Froneman hasn’t set the phones ringing at AngloGold’s Newtown offices in Johannesburg. “Of course, we can get there by sitting on our hands and letting the earnings of this company flow through,” he said of gold industry consolidation: “… but we’re not a management team that sits on our hands”.