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The next CEO of AngloGold Ashanti, named on Tuesday as Alberto Calderon, has canceled the discussion of a merger between the word’s third gold miner and his South African counterparts, saying the company can offer returns to shareholders simply “doing the basics right”.
Calderon, an industry veteran, told the Financial Times he was not surprised that smaller rivals wanted to “get their hands on AngloGold,” but said the $ 8 billion company was already big enough.
“When you have 3 ounces [of annual production] you have enough scale and therefore doing more than 3 ounces will not give you synergies per se, ”he said. “In a relatively short amount of time, years and not months, this company could add a lot of value.”
AngloGold has been one of the worst performing companies in the world for the past year, as the search for a new boss dragged on and the company was forced to suspend operations at a key mine in Ghana.
Acquisition speculation has swirled around the Johannesburg-listed company since Sibanye-Stillwater chief Neal Froneman said in March it should merge with AngloGold and Golden Fields to create a South African precious metal champion.
“No one from Anglo has talked about it,” Calderon said. “They are obviously the other smaller players who would die to get their hands on a company like AngloGold. I hope that in my conversations with shareholders they can see the advantage we have as we are today. . . and I think they know there’s huge potential just by doing the right basics. “
Calderon, a 61-year-old Colombian who ran for the best place in BHP before the place went to Sir Andrew Mackenzie, will take the helm of AngloGold in September.
The company has been headless since the abrupt September departure of former Barrick executive Kelvin Dushnisky after two years on paper.
Shares of AngloGold rose 5% in news of Calderon’s appointment on Tuesday, but have continued to fall 45% over the past twelve months.
Tyler Broda, an analyst at RBC Capital Markets, said the announcement was positive as it helped remove the “leadership uncertainty” that had weighed on AngloGold’s share price.
AngloGold, which emerged from a mining empire created by Ernest Oppenheimer, sold them rest of South African mine last year to focus on more profitable operations elsewhere in Africa, Australia and America.
This has led to talk that the company should move its listing to London, an action that could also help drive a new rating of its shares. AngloGold is trading at 50% off industry leaders Newmont Corporation and Barrick Gold.
Calderon described London’s discreet list as the “elephant in the room,” which was something that had to be dealt with but was not an immediate concern. “It’s part of a set of options to really reduce that discount,” he said.
Calderon, who resigned as head of Australian explosives maker Orica in March, said his initial focus would be to rebuild credibility with investors.
He said AngloGold needed to convince the market that it could turn gold resources into reserves and run on projects such as extending the life of the Geita Mine in Tanzania and the development of a copper-gold site in Colombia.
“I looked at the challenges facing the company and thought that, to be honest, they were my alley,” Calderon added. “With this, I want to say that it was a question of an organic growth, it was a question of executing projects and of improving the credibility in front of the groups of interest. It’s also a bit about streamlining the operating model. That’s what I’ve been doing for twenty years. “
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