SHARES in Sibanye Gold, formed by the unbundling of some of Gold Fields’ South African assets, surged 19 % in the first week of trade on the JSE. The gold miner has added about R2bn to its market capitalisation.
But, investors should be wary of the short-term optimism built into the share price, PSG Konsult portfolio manager Drikus Combrinck said on Friday. "From the risk point of view, the economic life of Sibanye assets is very short. I don’t think the strong buying momentum comes from institutional activity. It is likely driven more by speculators."
The gold miner’s shares rose as much as 5% on Friday, before ending the day 0.61% softer at R16.20, valuing it at R11.852bn.
Sibanye debuted on the JSE last Monday at R13.05 a share, following its unbundling from Gold Fields late last year. The strong dividend yield forecast had mainly attracted market participants, said Investec Asset Management equity dealer Ryan Wibberley.
Sibanye CEO Neal Froneman last week said it would take a few weeks to establish a representative price, and "we would expect a continuous rerating of the share as the market recognises the underlying value of the assets‚ their cash-generative abilities and Sibanye’s stated positioning as a benchmark dividend yield vehicle".
As a fully independent, unhedged gold company, Sibanye would be highly leveraged to the rand-gold price and would generate significant cash flows, which it would ring-fence for its stakeholders, the company said. The generally warm market reception for Sibanye came even as other bigger gold peers struggled to attract investor interest.
The gold spot price maintained its weakening bias last week, leading UBS analysts to trim their one-month target of the metal, citing the pickup in global economic growth, which takes the shine off the assets that are perceived to be defensive.
Gold for immediate delivery fell 2% to $1,601 an ounce in late-afternoon trade on Friday. Gold Fields lost 5.4% to R85.39, Anglo Gold Ashanti gave up 5.17% to R241.50, and Harmony Gold shed 4.82% to R61.15. "There is a lot of uncertainty on the direction of gold … so attracting investor interest is likely to remain a challenge.
"Potential positive catalysts (though) are lined up, starting with the automatic budget sequestration in the US," UBS analysts said.