South African gold miners lose stock value

The nine exclusive members of the global Tier I gold producer club have seen stock prices fall by an average 20% from 12-month highs.

The major losses have been sustained by three South African mining companies: Harmony, Gold Fields and AngloGold Ashanti.

Harmony’s stock has fallen by 43% from its 12-month high and Gold Fields has lost nearly one-third of its value.

Harmony, Gold Fields and AngloGold Ashanti all have large reserves that lie at great depth and the risks of mining at depth have been highlighted in recent company results.

As a result, investors appear to be increasingly adverse to the difficulties of deep level mining, which include fast-rising costs and safety issues.

For South African mining companies, these come in addition to some of the most inflexible labour legislation in the world.

Other members of the Tier I peer group have tended to steer away from the deep and ultra-deep Witwatersrand basin gold of South Africa, preferring shallower depth mines in other countries.

However, only this year, Gold Fields acquired South Deep, which is to the west of Johannesburg and has long been considered as the world’s biggest undeveloped gold ore body.