30 November 1998
Gold Fields, Anglogold
delay share offer
Share price needs a longer-term track record for a
positive rerating
David McKay
GOLD Fields and Anglogold were prepared to play a
waiting game before making an offer to minority
shareholders in Driefontein Consolidated, the west rand
gold mine the groups want as a joint venture, analysts
said at the weekend.
Anglogold and Gold Fields agreed last year to share
control of Driefontein. Gold Fields would own 60% and
Anglogold 40%. An independent managing director was
elected to run the operation.
The joint venture depends on an offer to Driefontein
Consolidated's minority shareholders. However, the
relative strength of Driefontein's share to Gold Fields has
deterred Gold Fields from making an offer.
Gold Field's share price has strengthened in recent
weeks, but MD Tom Dale said on Thursday that only a
track record of good operational and financial results
would bring a positive rerating for Gold Fields. In the
meantime, Gold Fields was considering making an
announcement to shareholders, Dale said. It is believed
the group will say that it intends to hang fire on the
Driefontein offer.
Merrill Lynch gold analyst David Hall said Gold Fields
offered upside potential of as much as 47% from its
current price levels. Other analysts concurred, but
believed Driefontein Consolidated also had upside. This
was despite Driefontein's considerable capital
expenditure requirements of R2,5bn, which it needs to
access new reserves of 14-million ounces located at
deep levels.
Another analyst said Anglogold's and Gold Field's joint
venture agreement was the preferred way of resolving
the ownership tussle over Driefontein. "They are likely to
have a contingency plan, but they are in no hurry to make
the offer to Driefontein's shareholders. Driefontein
minorities will be sorry they held their shares," he said.
There are also signs that Gold Fields is on the brink of a
significant rerating. It is also expected that Gold Fields
would start to gain higher international exposure. Listings
in New York, Toronto and London were being
considered with some analysts believing Gold Fields
would buy a listed American producer.
Newly appointed Gold Fields chairman Chris Thompson
last week decided to take over the new business brief
until a replacement for Clive Wolfe-Coote is found.
Wolfe-Coote was the third Gold Fields of SA (GFSA)
executive to leave since the merger of GFSA's gold
mines with those of Gencor.
The slight widening in the values of Gold Fields and
Driefontein Consolidated halted on Friday. Gold Fields
lost R2,15 or 5,6% to end at R37 on the JSE, probably
in line with weaker bullion and a consequent weakening
in the SA gold board, which lost nine points.
Driefontein's share price, however, increased 50c to end
the day at R30,50. Driefontein shares have shed R3,25
or almost 10% this month
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