Negative sentiment on South Africa ‘significantly overblown’ – Cutifani – by Martin Creamer ( – February 20, 2013)

JOHANNESBURG ( – The negative sentiment on South African had been “significantly overblown” at a time when the right things were being done, outgoing AngloGold Ashanti CEO Mark Cutifani said on Wednesday.

After delivering his last set of AngloGold Ashanti results for 2012 – the company’s second-highest ever yearly earnings of $924-million despite the negative impact of last year’s strikes, Cutifani said that AngloGold Ashanti’s share price should be trading at around $60 a share on the New York Stock Exchange based on earnings and cash-flow growth since 2008 rather than the current $27 a share.

The company was introducing the new ounces at half the price of the industry, which, he was confident, would eventually stand it in good stead. But in the meantime, its share price was being discounted as a result of negative sentiment towards South Africa, as was also the case with South Africa’s other gold majors.

“The great frustration is the share price,” said Cutifani, who takes up the position of CEO of Anglo American on April 3. He said he remained “immensely confident” about the future of South Africa and praised Minerals Minister Susan Shabangu for bringing the two conflicting mine unions together to sign an accord.

“That’s the sort of leadership the world needs to see,” added Australia-born Cutifani, who is also president of the Chamber of Mines of South Africa.

“In my view, the fundamentals are sound in South Africa. We’re getting back to the right conversations and we’re becoming much more sensitive about headlines and people trying one-upmanship.

“If we work together and manage the perception of how we’re dealing with the issues, it will get us back on track for people to be comfortable to invest in the country for the future, and that’s what we want to see,” Cutifani told Mining Weekly Online in a video interview (see attached).

While there was a calculation doing the rounds that AngloGold Ashanti was 68% undervalued, Cutifani believed it to be more than that.

Delivery against objectives had been the best in the industry in the last five years, with industry-leading earnings up 500%, safety improvement up 70%, environmental protection up 70% and community relations in a new paradigm.

It was the gold industry’s best-performing stock in the period from 2008 to 2011 by a considerable margin.

The company was looking at all options to unlock that value. At this stage, a physical structural change like unbundling did not appear to be a compelling case.

Investments were continuing in the company’s Mponeng and Moab Khotsong gold mines in South Africa to ensure stable production for more than 30 years.

“We have always been a strong promoter of the future of South Africa and of transformation,” Cutifani said.

Work on new technologies was setting the company up for a “great” half-century of operation.

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