Gold Fields’ shares expected to lag until management vacuum filled say analysts

SHARES in Gold Fields are forecast to underperform owing to management and strategic uncertainty following the shock resignation of CEO since April 2021, Chris Griffith last year.

Martin Preece, GM of the firm’s South Deep mine, is the interim CEO until a replacement is found – a process that could take up to six months, according to Gold Fields chairman, Yunus Suleman.

The company will also lose a significant portion of its executive team with heads of legal and strategy expected to follow through on earlier decisions to resign. The vacuum in senior skills from April adds “another layer of strategic uncertainty at the firm,” said analysts at RMB Morgan Stanley in a report last year.

Griffith left the company following the failure to secure the takeover of Yamana Gold. Suleman said Griffith had decided to take the failure on the chin and enable Gold Fields to move on.

“We expect this development to create uncertainty that would weigh on the valuation until the CEO role has been filled on a permanent basis,” said Arnold van Graan, an analyst at Nedbank Securities. He advised clients to prefer shares in AngloGold Ashanti until Gold Fields’ future was clearer.

AngloGold itself spent part of 2021 without a full time CEO following the surprise resignation of Kelvin Dushnisky. During that time, shares in the company heavily underperformed the market. AngloGold also received an informal approach from Sibanye-Stillwater regarding a possible three-way tie up that included Gold Fields.

Is Gold Fields in play? “I don’t think so,” said Suleman last year. “We are comfortable there won’t be any gap in the strategy. In essence, we are in a strong position; we have a strong board and a strong executive team; and the company is performing very well,” he said.

“Can anyone really buy Gold Fields,” said Jamie Sherman, a portfolio manager at Kite Lake Capital Management in the UK. “The government will hate the deal and the buyer will inherit a ton of South African political risk, not only from the listing but from a deep mine (South Deep),” he said.

Shares in Gold Fields are 8.7% higher since Griffith announced his resignation on December 13, largely in response to the gold price which is 3.5% higher on the same period. In comparison though, shares in AngloGold Ashanti and Newmont are 11% and 11.7% higher respectively since December. Shares in Barrick Gold are a shade higher than Gold Fields, gaining some 9% since December 13.