#BHP’s Bid for #AngloAmerican is Laden with Potential Pitfalls & Challenges…

Buying $AAL.L means $BHP would gain access to 3 of world’s largest #Copper mines.

Merger would improve BHP’s exposure to copper by ~40%—and more significantly—give it 10% of global copper production.

This, however, is likely to lead to significant anti-trust/competition scrutiny in Peru and Chile—not to mention South Africa. 

Dislocation of #Gold Markets Continues

The disconnect has remained wide as some of the world's largest banks, which are also the top gold dealers, have grown wary. Even though there is now plenty of time to get metal to New York for June delivery, the wild moves of recent weeks, and the potential for coronavirus-induced logistical headaches, have increased the perceived riskiness of trading the two markets.

"I would guess that the risk managers are not allowing these big positions to be run," said John Reade, chief market strategist at the World Gold Council. "It's moved from a concern about availability and transferability of metal to one of risk appetite."

See the whole article on Bloomberg here: https://www.bloomberg.com/news/articles/2020-04-17/gold-s-two-biggest-markets-are-still-stubbornly-disconnected

bit.ly/MasterMetals

#Palladium, #Rhodium, #Platinum #PGM’s

LONDON (Reuters) - A rally in rhodium, a precious metal used to reduce vehicle emissions, has exploded into high gear, with surging demand and an uncertain supply outlook pushing prices up 40% in just three weeks to near record highs.

Rhodium RHOD-LON is used to neutralise nitrous oxides in car exhausts, and increasingly stringent emissions regulations, particularly in China, are forcing auto makers to use more of the metal.

Demand is expected to outstrip supply this year and supplies are being disrupted by power outages at South African mines which produce more than 80% of mined rhodium.

Prices have rocketed to $9,975 an ounce from $6,040 at the start of January - ten times their level through the mid-2010s and within a whisker of an all-time high of $10,050 in 2008.

"It's being driven by insatiable demand from Asia," said Scotiabank analyst Nicky Shiels.

"There is also a supply side trigger with power cuts in South Africa. That injects a certain amount of fear into the market and in a small, opaque market that can have a huge impact," she said.

(Graphic: Rhodium, palladium and platinum prices - here)

#Gold Prices Hitting All-Time Highs In #GBP, #JPY, #CAD, #AUD

"If I had money in the bank, I [would] sell the dollars and use that money to buy gold. You are divesting yourself from your currency by selling it and buying a hard asset. People are concerned," said RJO Futures senior market strategist Phillip Streible.

Spot gold in British pounds rallied 2.04% on the day, hitting above GBP £1,208 an ounce during the North American trading session, according to Kitco's aggregated charts.

"There is a lot of risk with the British pound right now. The EU would be the first to go into a complete recession, followed by the British pound," Streible pointed out.

Gold in Japanese yen hit a record high on Monday as well with spot prices jumping more than 1.3% on the day at last trading at JPY ¥155,550.

With #SouthAfrica’s GDP/person lower than in 2013, #Ramaphosa faces a daunting task if he wins May’s #election

#Zuma's presidency cost #SouthAfrica 1.1trn rand ($78bn) in GDP, 300bn rand in taxes, and more than 1m jobs.

From The Economist

South Africa is a better place to live than in 1994. A liberal constitution protects the rights of all citizens, no matter their race. The poor have more of their basic needs met. The share of households without electricity fell from 42% in 1996 to 10% in 2016, while the fraction going hungry has plummeted. Blacks make up 50% of the country's middle class, according to recent research. This is much lower than their overall share of the population (80%) but it is a sign of uneven progress. Black South Africans now account for more sales of suburban homes than whites do.

Most South Africans believe that race relations are better today than they were in 1994. A survey published in 2016 by the Institute of Race Relations (irr), a think-tank, found that 54% of respondents felt relations were better than a generation ago, with 22% saying they had stayed the same, and 20% believing they had worsened. According to the same study, just 5% of South Africans said "racism" was the biggest issue facing the country.

...

That is the good news. The bad news is that most of the progress made since 1994 came before 2009. It was then that Jacob Zuma began his nine-year reign as president, during which time the thuggish kleptocrat and his cronies ransacked state-owned enterprises (soes), plundered local and provincial governments, and ravaged the law-enforcement institutions set up to curb such looting. The corruption of the ruling African National Congress (anc) predated Mr Zuma, and is outlasting him, but it was the former president who took venality to stratospheric levels.

The Zuma administration also ran the economy into the ground while ramping up public spending. The ratio of debt to gdp rose from 26% in 2008-9 to 56% in 2018-19. gdp per person is lower than it was in 2013. Analysis by Standard Bank suggests that, relative to the trajectory the country was on before Mr Zuma became president, his regime lost South Africa 1.1trn rand ($78bn) in gdp, 300bn rand in taxes, and more than 1m jobs.

The damage of the Zuma years extends beyond the economy. In a deeply unequal society with a violent past, a sense of mutual obligation is especially important. Yet, though South Africa has some of the largest mineral reserves on the planet, the commodity it needs most—trust—is in short supply.

Read the whole article here: https://www.economist.com/special-report/2019/04/25/cyril-ramaphosa-faces-a-daunting-task-if-he-wins-south-africas-election

Bit.ly/MasterMetals

AngloGold's international assets will be spun out into new London listed Newco. 

AngloGold springs London Newco surprise, sets out to raise $2.1bn

JOHANNESBURG (miningweekly.com) – Johannesburg- and New York-listed gold-mining major AngloGold Ashanti on Wednesday sprung a restructuring surprise with the spinoff of a separate Newco that will be listed in London, along with corporate restructuring and the raising of additional $2.1-billion capital next year in a move that would leave it debt-free.

AngloGold, under fast-moving CEO Srinivasan Venkatakrishnan (Venkat), has proposed Gmorphing into simpler entities with Newco taking over gold production and exploration assets outside South Africa and AngloGold focusing on its South African portfolio and giving consideration to developing a multi-commodity growth strategy in South Africa and beyond over time.

Investec Securities said that latest data indicated that AngloGold Ashanti's international assets generated 60% to 65% of its gross profit and made up 75% of the assets.

Venkat said that AngloGold, which would initially be the controlling shareholder of the London-listed Newco in what is a partial demerger, would continue to be a South Africa-domiciled company under a new name and Newco would have an inward South African listing on the JSE. 

Thirty-five per cent of Newco would be partially demerged to the shareholders of AngloGold, which would initially retain a 65% controlling interest.

"Newco could be a £3-billion company that would place it in the gap between African Barrick at £1-billion and Randgold Resources at £4-billion," Investec added.

Venkat would continue to lead AngloGold together with incoming CFO Christine Ramon, chief operating officer Mike O’Hare and Italia Boninelli.

AngloGold’s Charles Carter would move out as the Newco’s designate CEO, and be joined by AngloGold chief operating officer Ron Largent and AngloGold executive team members Graham Ehm, Maria Sanz Perez and David Noko.   

Each business would chart its own course under separate identities.

AngloGold told the JSE that it had obtained South African Reserve Bank approval to restructure its international mining operations under the new UK Newco, which would seek a premium LSE listing, plus inward JSE and and NYSE secondary listings.

The restructuring was motivated by the belief that separately-listed vehicles would give independent management teams the opportunity to execute distinct strategies in the context of the current low gold price and macroeconomic environment.

It was envisaged that simplified portfolios would allow each management team scope to accelerate initiatives to lower operating costs and benefit from flatter overhead structures.

The combined corporate costs of both entities would be materially reduced and separate listings would also allow each to reflect their individual investment cases and associated access to capital in distinct markets.

"The two distinct parts of our portfolio require different strategies to realise their full potential and unlock further value for shareholders,” new AngloGold chairperson Sipho Pityana said.

The existing AngloGold board would remain with the exception of Michael Kirkwood, Newco’s designated chairperson, and David Hodgson, who would resign to join the Newco board once established.

AngloGold would have the right to nominate two nonexecutives, who would initially be Pityana as deputy chairperson and Venkat, for as long as the company’s shareholding in Newco was higher than 20%.

AngloGold wanted an equity capital raising rights issue irrespective of whether or not the restructuring occurred on the basis of its current debt levels deemed as too high.

The restructuring would itself render AngloGold debt free apart from existing guarantees to comply with reserve bank conditions.

Most of the $2.1-billion raised would be used to repay debt and allow AngloGold to retain flexibility and strengthen its balance sheet.

Execution, planned for 2015, was subject to shareholder approval at a general meeting, as well as regulatory and third-party consents.

AngloGold said that it had returned to production growth, commissioned two new projects and significantly reduced costs against the background of a 25% drop in the gold price in the last two years.

Second-quarter production had increased 17% to 1.098-million ounces, all-in sustaining costs lowered 19% to $1 060/oz, corporate and marketing costs cut 65% to $20-million and earnings before interest, taxes, depreciation and amortisation increased 33% to $382-million while a record safety performance was posted.

Edited by: Creamer Media Reporter

AngloGold springs London Newco surprise, sets out to raise $2.1bn

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