Are the top four gold miners in South Africa still a buy?

The four largest gold miners on the JSE:

AngloGold Ashanti (ANG)

Gold Fields (GFI)

Harmony Gold (HAR)

Sibanye Stillwater (SSW)

Are ANG, GFI, HAR, and SSW shares still a buy?

Broker ratings and IG client sentiment

The table highlights how major South African gold miners (AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Stillwater) are currently viewed on both analyst ratings (as polled by Thomson Reuters), as well as IG client sentiment at the time of writing.

The Thomson Reuters analyst ratings and IG Client sentiment are features available on IG’s trading platform . The ratings and sentiment indicators are snapshots of these views on the respective shares as of the 5th of September 2020.

ANG, GFI, HAR and SSW share price outlook positive for IG Clients and Institutional Investors

Major gold miners Gold Fields, Harmony and Sibanye Stillwater all carry average long-term analyst ratings of ‘Buy’ amongst institutional analysts, while AngloGold Ashanti has an average rating of ‘hold’ and is the only one of the four companies cover here to have two ‘strong sell’ recommendations.

In terms of IG client sentiment data, AngloGold carries the most ‘long’ open interest and the least short open interest (as of the 5th of September 2020).

“Long” means that traders with open positions on the company expect the price to rise in the near term, while ‘short’ means that traders with open positions on the company expect the price to fall in the near term.

ANG, GFI, HAR and SSW trading view

Locally listed gold mining counters ANG, GFI, HAR and SSW have seen their respective share prices amongst the best performing in 2020, benefitting from improved operational efficiencies and significant gains in the rand basket price of the underlying commodity.

AngloGold Ashanti (ANG)

AngloGold Ashanti Ltd (ASX) is South Africa’s largest gold miner (representing 3.57% of the Index) in terms of market capitalization. However after selling its South African assets to Harmony Gold, Harmony becomes the country’s largest gold producer.

South Africa's mines ministry has recently approved the asset sale on condition that it does not delist from the Johannesburg Stock Exchange (JSE). AngloGold is exiting its local operations to focus on what it deems its less cost intensive operations in Ghana, Australia and America (North and South).

As has been the recent industry trend, interim earnings for the gold miner have benefitted from a sharp increase in gold prices, positive currency translations and cost cutting initiatives. Headline earnings per share for the six months ended June 30 gained by 234% from the prior year’s comparative period.

Gold Fields (GFI)

Interim results released in August this year showed a massive 300% increase in Gold Fields Ltd - ADR group headline earnings per share from the prior year’s comparative period. Investors have been rewarded with a three-fold increase in the company’s interim dividend offering (in $ terms).

Harmony Gold (HAR)

Harmony Gold Mining Co Ltd is expected to release full year results in mid-September after having delayed the release thereof due to ‘difficulties in completing audits and divisional reporting’ as a result of Covid-19 disruptions. However recent guidance from the company has suggested a 15% drop in gold production for the period due to lockdown restrictions.

The restrictions have also increased the groups ‘All-in Sustaining Costs For All Operations’ by between 17% and 19%. A softer ZAR and higher gold price over the period would have boosted the average received price for the commodity by 25%, equating to strong operational cash flow for the business.

Sibanye Stillwater (SSW)

While Sibanye Stillwater Ltd has seen a strong diversification into platinum group metals the company is still a major producer of gold in South Africa. Recent results have shown a return to profitability in the interim period from a loss in the prior year’s comparative period, benefiting from buoyant precious metal prices and a softer ZAR. The return to profitability see’s Sibanye rewarding shareholders by reinstating its dividend offering.

How to trade top 4 gold miners in South Africa

If you want to trade any of the top 4 gold stocks discussed, you can utilise IG’s CFD trading platform to speculate on the share price movements of the underlying asset – to buy (long) or sell (short) following these simple steps:

1. Create an IG Trading Account or log in to your existing account
2. Enter the company name or ticker in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade

In summary

• Gold counters continue to benefit from gains in the rand price of the commodity
• Sibanye Stillwater has reinstated its dividend offering to investors
• Harmony gold, after acquiring AngloGold South African assets will be the largest producer of gold in the country
• AngloGold is exiting its local operations to focus on what it deems its less cost intensive operations
• Harmony, Gold Fields and Sibanye all carry long term average analyst ratings of buy
• AngloGold Ashanti has an average long-term analyst rating of hold
• All four gold miners covered see IG clients with a net long open interest
• AngloGold has the highest percentage of long open interest by IG clients