Profits are more than 6x higher at AngloGold Ashanti (JSE: ANG)
Production has increased at the right time
Mining companies cannot control the price of commodities. All they can control is their production, with shareholders hoping for production increases at a time when prices are nice and juicy. At AngloGold, this has been the case in the first quarter of 2025.
Driven by acquisitions and output improvements, gold production increased by 28% at a time when the average gold price per ounce was 39% higher (in dollars). The cherry on top was a drop of 2% in cash costs per ounce as well as all-in sustaining costs per ounce at owned operations.
Although there were some challenges in the joint venture operations, these were swept away by the strong performance in owned operations. A group level increase in cash costs per ounce of 4% wasn’t enough to spoil the party, with AngloGold achieving a 158% increase in adjusted EBITDA. More importantly, HEPS jumped from $0.14 to $0.88 – or 6.3x higher year-on-year!
Capex increased 27% year-on-year, so they are still investing for the future as one would expect. That seems like a modest increase in the context of current profits, which is why the balance sheet is looking so strong right now. Adjusted net debt to adjusted EBITDA is just 0.15x, down from 0.86x a year ago.
AngloGold is now paying an annual base dividend of $0.50 per share, which means there’s a quarterly dividend of $0.125 per share. This is tiny in the context of HEPS for this quarter. In Q4 each year, there will be a further payment to take the dividend up to 50% of free cash flow. In other words, they are now just playing the dividend aristocrat game that is tried and tested on the US market, with consistent but artificially low quarterly dividends.
The share price is up 78% over 12 months and has more than tripled over 3 years.
The Barloworld deal hasn’t reached sufficient acceptances (JSE: BAW)
The deadline has been extended to try and save the deal
After the scheme of announcement for the take-private of Barloworld failed, the standby offer kicked in. Technically, the offeror has the ability to walk away if they don’t reach a 90% acceptance rate. The technical reason is that 90% is the level at which you can force a squeeze-out, which then acts like a scheme anyway and ends up with a 100% holding.
But if they didn’t get the scheme right (a 75% approval threshold), then it was never going to happen that they would get to 90%. I don’t believe that the 90% threshold is relevant for any reason other than to give the offeror maximum flexibility. My suspicion is that they would go ahead with the offer at a far more modest acceptance rate, but it does need to be above the current level of 46.93%.
To try and improve the current rate, they are extending the deadline for acceptances to 30 June 2025.
The share price is currently at R105 and the offer price is R120, so the market is pricing in a failed deal at the moment.
Collins Property Group is recycling capital from SA to the Netherlands (JSE: CPP)
They are selling properties worth almost R650 million
Collins Property Group holds three properties that are leased to Trident Steel, located in Durban, Roodekop and Port Elizabeth. The tenant has been in the properties for over 20 years and will be buying the properties from Collins for a total price of just under R650 million.
Property nerds will enjoy how nuanced the deal is for the Roodekop property, as Trident doesn’t want to acquire the two other properties at the site that are subject to a notarial tie. This leads to a bare dominium and usufruct structure, with a plan by Collins to break the notarial tie and establish an industrial estate.
Another interesting point is that Collins will pay R32.8 million for the cost of repairs to the property on the transfer date, with that amount coming out of the R650 million purchase price based on my understanding.
The value of the net assets is estimated to be R617 million, so that’s perfectly in line with the selling price less the repair costs. The interim net operating income was R43.6 million. If we just annualise that, the yield on the amount net of repair costs is around 14%.
That’s a high yield, but these are single tenant sites in industrial areas. I’m not surprised that Trident is quite happy to buy these properties, as that’s a decent return on capital for them and it secures the sites forever. As for Collins, their plan is to recycle this capital into properties in the Netherlands. We haven’t seen much in the way of offshoring of capital in the property sector recently!
Mantengu Mining has pressed the big red button on share price manipulation (JSE: MTU)
Either they are right, or the market will never touch this management team again
At some point, Mantengu Mining either had to stop writing wild SENS announcements about share price manipulation, or actually take the big step. After the recent announcement that was even weirder than the preceding ones, they’ve finally gone with the latter.
And boy, have they come out swinging. The nuclear button has been pressed.
Mantengu Mining has filed a criminal complaint with the Hawks against JSE executives and others. They claim that this comes after 18 months of investigative work into alleged share price manipulation. To claim that the JSE is in bed with some kind of syndicate is truly extraordinary stuff.
Of course, they can’t help but add daft comments like this into the announcement: “MTU’s trading statement, released on SENS on 6 May 2025, indicated that it expects to report earnings that are significantly more than its market capitalisation at the time of the trading update. The Company believes that this disconnect stems largely from alleged share price manipulation.” – I will remind you that this is a company that guided a headline loss per share. The earnings per share number is less important.
There are literally only two outcomes here. Either they are right, in which case this will be quite the scandal and the market will forgive the company for some of the additional arguments made in these announcements that show poor understanding of markets. Or, they are completely wrong, in which case the “you’ll never work in this town again” joke isn’t a joke in this case.
Time will tell. Either way, I suspect there are more peri-peri flavoured SENS announcements to come.
Montauk Renewables reported a loss (JSE: MKR)
As usual, they’ve put the bare minimum effort into investor relations
I’m becoming increasingly convinced that Montauk Renewables doesn’t actually want more shareholders on the JSE. Their SENS announcement simply directs you to the Form 10-Q on the SEC website (as they are listed in the US) for their quarterly announcements. Now, I have no problem with that, but a Form 10-Q is a completely daunting thing for non-professional investors to understand.
If you hunt around on the website, you’ll find a presentation. Sadly, the slides mainly consist of screenshots of financial tables, so that doesn’t exactly help either.
So, the 10-Q will have to do, which means you need to work through the financial tables until you finally reach the management commentary. The TL;DR for Montauk is that they operate Renewable Natural Gas (RNG) projects that either supply the transportation industry or use the RNG to produce Renewable Electricity.
In terms of the financials, the latest quarter saw a 9.8% increase in revenue. A 15.8% increase in operating expenses quickly ruined that party, taking quarterly operating income down from $2.37 million to just $410k. Once you take into account interest expenses, there’s a net loss of $464k vs. net profit of $1.85 million in the comparable period.
The share price is down 49% over 12 months. If they are going to report losses and aren’t going to put any effort into properly explaining their strategy to the market in a way that is easy to understand, that I don’t see that trajectory improving anytime soon.
Newpark REIT is slightly ahead of guidance (JSE: NRL)
Lower than expected operating costs have been helpful
Newpark REIT has released a trading statement dealing with the year ended February 2025. The good news is that they ahead of the full-year guidance that was given at the time of the interim results, which suggested funds from operations per share of between 67 and 78 cents per share.
Thanks to lower operating costs than they expected, they are coming in at 78.37 cents per share. The total dividend for the year is expected to be the same (which means a final dividend of 48.37 cents), representing an 11.4% year-on-year increase in the total dividend.
Old Mutual picks an ex-Sanlam exec as the new CEO
Given the relative outperformance of that group, that’s a good idea
Old Mutual has announced that Jurie Strydom will be replacing Iain Williamson (who is retiring) as CEO of the group from 1 June 2025. Strydom is very highly qualified (including an MBA from MIT) and has served as CEO of Sanlam Life and Savings, among other companies. He also has a particular grasp of fintech.
Old Mutual has been the perennial underperformer in the sector and isn’t exactly renowned for innovation as a whole, so the board appears to be taking steps to rectify this.
The market certainly agreed, sending the share price 10% higher on the news.
A rough day for Raubex shareholders (JSE: RBX)
Whistleblower allegations will delay the release of financials
Raubex closed 7% lower on the day after announcing that financials for the year ended February 2025 will be delayed based on the receipt of an anonymous whistleblower report on 22 April. It alleges unlawful or improper conduct regarding the group.
Although these allegations are unproven at this stage, the board is taking them seriously. An investigation is being launched and no guidance has been given for when results will be announced. At this stage, the guided earnings range in the trading statement is unchanged.
Depending on how long this takes of course, Raubex could end up being temporarily suspended from trading if the results are sufficiently delayed. At this stage, there’s no guarantee that this will be the outcome. In fact, there are no guarantees of anything really!
Sibanye’s profits have jumped year-on-year (JSE: SSW)
And yet the share price is flat over 12 months
I think that the market has been so battered and bruised by Sibanye-Stillwater that investors find it hard to extrapolate any kind of good news. Despite the latest quarter reflecting adjusted EBITDA that has nearly doubled year-on-year, the share price is flat over 12 months. This shows you how much uncertainty there is. It’s going to take a few strong quarters to improve sentiment here.
Sibanye can’t do much about the share price, but they can do a lot about their earnings. There have been a number of restructuring activities at the group, contributing to a 74% increase in adjusted EBITDA in the South African PGM operations. The gold price has obviously done wonders for their gold business, increasing adjusted EBITDA by 178%. Sadly, the US PGM underground business suffered a loss this quarter, so it’s not all good news.
With Sibanye, it’s very important to understand the relative sizes of the underlying operations. The South African PGM operations are the most important, contributing R2.53 billion in adjusted EBITDA in this quarter. Next up is South African gold, with R1.8 billion in adjusted EBITDA. Thanks to a strong improvement, the Australian Century zinc retreatment business is next, with adjusted EBITDA of R178 million. Normally, the US business would be much more important than the Australian business, but the US could only manage positive adjusted EBITDA of R20 million as Reldan and the recycling business slightly more than offset the loss in the underground operations. Finally, the nickel business in Europe suffered negative EBITDA of R181 million, which is pretty similar to the number in the comparable quarter.
Despite the narrative around the circular economy and the other exposures in Sibanye, this remains a PGM and gold group at its core. The gold business is being flattered right now by the gold price. The market knows that PGMs are key, which is why there is much caution in the share price – there are many burnt fingers in that space in the local market. Although the share price is flat over 12 months and this doesn’t necessarily make sense in the context of latest earnings, it’s worth pointing out that the share price is up 43% year-to-date.
Nibbles:
- Director dealings:
- Stephen Saad has bought another huge chunk of Aspen (JSE: APN) shares, capping off a week of a strong message sent to the market about the long-term viability of the group. The latest purchase is for R83 million.
- The recently retired CFO of ADvTECH (JSE: ADH) sold shares worth R10.3 million. Whilst I understand the need to diversify into retirement, I never enjoy the messaging behind execs selling shares as soon as they retire. It doesn’t imply a long-term mindset among execs.
- The financial director of KAL Group (JSE: KAL) bought shares worth R99k.
- The CEO of Ascendis (JSE: ASC) and a major shareholder each bought shares worth nearly R31k.
- A number of Anglo American (JSE: AGL) directors reinvested their dividends in shares in the company. Ditto for several British American Tobacco (JSE: BTI) directors. Although I don’t usually bother with these reinvestments (in my view, they aren’t nearly as strong a signal as a purchase using other cash), I thought I would make you aware that this happens in the market.
- London Finance & Investment Group (JSE: LNF) shareholders will receive their distribution of R17.39188 per share on 19 May. The last day to trade is 12 May and the listing will be terminated from 20 May.
