AngloGold's sale of last South Africa mine is credit-positive

This is according to Moody's Investors Service. 

The decision by AngloGold Ashanti to sell its last remaining South Africa-based assets is credit-positive as it will streamline the miner’s asset portfolio and optimise capital allocation, credit agency Moody’s Investors Service

AngloGold Ashanti said it will sell its South African assets for about $300 million (about R4.4 billion) to Harmony Gold, marking the end of its exposure to the country’s mining industry.

AngloGold Ashanti is selling its Mponeng mine and Mine Waste Solutions tailings recycling business to Harmony Gold.  The gold miner said in May it will review divestment options for its South African assets, which include the world’s deepest mine, as it looks to streamline its portfolio and focus on assets that deliver higher returns.

AngloGold said the deal includes a cash and deferred payment totaling about $300 million, subject to subsequent performance, with additional proceeds due if the West Wits assets are developed below current infrastructure.

With a remaining mine life of eight years, AngloGold would have had to start planning and preparing for a large capital investment in the near future to extend the mine’s life if it was committed to keeping this asset in its portfolio, Moody’s said.

The company’s overall scale of production and portfolio diversification will not deteriorate as a result of the sale because it is more than offset by the recent completion of the Obuasi mine redevelopment in Ghana, the agency said.

“AngloGold selling its Mponeng mine in South Africa is another positive step in its strategy to streamline its mine portfolio and lower its overall cost structure,” said Rehan Akbar, a vice-president and lead analyst for AngloGold Ashanti at Moody’s.

“The Mponeng mine is the world’s deepest gold mine and has a relatively high cost structure because of the complexities of operating a mature and ultra-deep mine.”