HEPS at Gold Fields has more than doubled (JSE: GFI)

The consolidation of Gruyere in Q4 has further boosted the numbers

Gold Fields released a trading statement dealing with the 12 months to December 2025. They’ve indicated HEPS growth of between 110% and 123%, while normalised earnings per share will be between 112% and 126% higher. Whichever way you cut it, that’s a delightful outcome that we’ve become accustomed to seeing in the gold sector.

The obvious driver of this boost to earnings is the higher gold prices. The company also enjoyed increased sales volumes of gold, as well as the positive impact of the full consolidation of Gruyere (the stake was increased from 50% to 100% at the beginning of Q4). To add to the happiness, Salares Norte reached steady-state production in Q4, with a 43% increase in production vs. Q3.

It wasn’t all good news, though. Mining inflation is impacting the all-in sustaining cost (AISC), coming in at $1,673/oz in Q4 vs. $1,557/oz in Q3. That’s obviously much lower than current gold prices, but the mining houses will still need to keep an eye on costs.

For the full year, attributable gold equivalent production was 18% higher year-on-year and at the upper end of the guided range. All-in sustaining cost (AISC) was 1% higher at $1,645/oz, within the guided range. This shows how variable the quarterly numbers can be vs. taking a full-year view.

Discovery buys Phase 1 of their head office from Growthpoint and others (JSE: DSY | JSE: GRT)

And Growthpoint is buying 45% in Discovery Phase 2

Here’s an interesting one for you to ponder: when two large, financially sophisticated companies do a transaction, which one is getting the better deal? And can they both win at the same time?

Let’s start from the perspective of Growthpoint, the iconic South African REIT that owns too much office property in Sandton (especially of the lower grade variety). They’ve made it clear several times that they are looking to simplify and focus their portfolio. The Western Cape has certainly come up as a desired area, but perhaps most of all they need to reduce their exposure to Sandton office space, something that was a fantastic asset a decade ago and isn’t so great anymore.

Now let’s do Discovery, who occupy a beautiful head office building in Sandton that immediately irritates anyone who had a medical aid claim denied. They have 7 years left on that lease and it would be a disaster to try move the entire company again, so it makes sense to just lock in the space and occupy it forever.

We are talking about R4.05 billion changing hands here for the Grove and Park buildings (Phase 1), so shareholders of both companies will want to understand the dynamics here.

Discovery talks about how interest rates and property prices in Johannesburg have reduced significantly, so they can switch from a lease to property ownership at a lower overall cost. In fact, they believe they will save a net present value of R800 million over the remaining lease period!

What about Growthpoint? They talk about capital allocation discipline and portfolio balance, along with a reduction in concentration risk as Discovery is a single tenant. Unfortunately, this means that the vacancy rate for the office segment at Growthpoint will go up, as they are selling a fully tenanted building and being left with other buildings that aren’t in such a favourable situation.

It feels to me like Discovery is coming out on top in this transaction, although I can understand the rationale from Growthpoint’s perspective as well. Truzen, the other shareholder in the property, is also willing to sell under these terms. It therefore can’t be too bad a deal.

Growthpoint owns 55% of Phase 1 (Truzen owns the other 45%), so they will receive R2.3 billion of the deal consideration. Their share was valued at R2.2 billion as at 30 June 2025, so this is a disposal at a premium to book value.

Remember, two things can be true here: (1) Growthpoint can be selling at a premium to book value, and (2) Discovery might be getting it right in terms of believing that Sandton property is a decent investment right now.

Now we reach the second part of this transaction: Phase 2 of the building. Discovery will cancel the lease for that building as part of this deal, as they have optimised their space requirements over time. Growthpoint clearly sees an opportunity here, as they are acquiring the other 45% in Phase 2 from Truzen. This investment of R323 million will give Growthpoint 100% ownership of Phase 2.

The trick here is that Phase 2 is a multi-tenanted P-grade office building, so Growthpoint can retain a presence in the area going forwards and spread the tenant risk.

The net proceeds for Growthpoint (the sale of Phase 1 less the investment in Phase 2) come to just under R2 billion.

It will take a while to be finalised, as this is classified as a Large Merger for Competition Commission purposes.

If nothing else, this is an interesting example of the art of the deal – finding what works for each party and structuring an outcome where both feel like winners.

Nibbles:

• Director dealings:
  • An associate of Pepkor (JSE: PPH) CEO Pieter Erasmus sold shares worth R531 million.

• There’s been an unexpected change of top management at Copper 360 (JSE: CPR). Graham Briggs, the ex-CEO of Harmony Gold who came out of retirement to help the company when it was in dire straits, has now taken a “leave of absence” – and so has Commercial Executive Stephan Du Plessis. They are being replaced on a transitional basis. Current COO Gordon Thompson comes in Transitional CEO, while Seten Naidoo moves from Chief Risk Officer to Transitional Commercial Executive. This announcement came out after market close on Friday, so get ready for some fireworks in the share price when it opens on Monday.

• Eastern Platinum (JSE: EPS) has secured another credit facility with Ka An Development Co. Limited for up to C$1 million. This is in addition to the previously announced facility, taking the total to C$2 million. The debt is priced at 10.25% per annum, in line with the local prime interest rate. The company is focused on ramping up the Zandfontein underground mine to target 70,000 tonnes of run-of-mine ore per month by the end of 2026.

• With the Bytes Technology Group (JSE: BYI) share price suffering tremendously in the greater tech sell-off that we are seeing (down 20% year-to-date), Coronation’s funds have reduced their stake slightly in the company. This is the exact opposite of buying the dip.