SA gold shares to surge higher as discount fades
SOUTH Africa’s gold miners were still playing a ratings catch up with their North American peers despite tracking for a cash margin of at least 40% this year, said PwC.“I think there’s a discount applied to investments in Africa that shouldn’t be there,” said Andries Rossouw, Africa Energy, Utilities and Resources leader at the auditing firm.Rossouw was commenting following the publication of PwC’s SA Mine report which collects industry data on trends in profitability, mergers and acquisitions, renewable energy adoption, regulatory conditions, and illegal mining.The report highlighted the outsized gains in the market values of gold miners such as Harmony Gold, Gold Fields, Pan African Resources and DRDGold. In the case of Gold Fields, its market capitalisation increased by nearly R200bn in the last 12 months. Harmony Gold’s market value increased by R50bn this year compared to 2024 and by more than R100bn set against 2023.Based on ebitda as a percentage of revenue, the JSE’s gold shares produced a levelised margin of about 35% in the year to June 2025. Asked if amid a gold price challenging $4,000 per ounce if this could improve further, Rossouw replied: “At the current prices, absolutely”.He warned, however, against the risk of inflation. “I think this is a word of caution – what happens when prices go up? Your ability to produce more could be there. It’s not as easy in our deep-level underground mines as what it might be in an open-cast operation”.Gold production revenue increased 22% to R132bn in the year to end June which was a highlight for the year considering platinum group metal and iron ore revenues fell 5% (R270bn) and 19% (R67bn) respectively.Across the South African mining industry, companies were on average less profitable. Ebitda fell 2% to R135bn for the period under review. The industry’s net profit increased 24% to R16bn owing to the absence of impairments this year.Rossouw said, however, that the improvement in platinum and palladium prices from May (the last two months of the period under review) augered well for industry performance in the current period.Asked for this view on the prospect of further gold price gains, Rossouw said central bank purchasing amid global risk was unlikely to change in the foreseeable future. There have been record inflows of private investment in gold, via ETFs, but he did not believe this presented systemic risk to bullion.“You’ve got China with foreign reserves invested in US treasury bills which they are replacing with gold. Other central banks are following a fairly similar stance. So the underlying demand is one thing that we all should recognise. This is an invested demand trying to address global risk, which is sitting at high levels,” he said.“The demand outlook still looks very positive because we don’t see any tapering off in risk, and we don’t see any change in central bank purchasing views at the moment,” he said.PwC’s report includes JSE-listed mining companies with a market capitalisation of no less than R200m but it excludes companies with primary listings offshore such as AngloGold Ashanti and Anglo American.The post SA gold shares to surge higher as discount fades appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com
Quelle: Mining.com
