AngloGold to move primary listing, head office out of South Africa

AngloGold Ashanti (NYSE: AU; JSE: ANG; ASX: AGG) is transferring its primary listing to New York from the Johannesburg Stock Exchange (JSE), further cutting its ties to South Africa, the country in which it was founded more than a century ago.

The gold producer said the switch included moving its headquarters to London, but noted it was keeping the South African office and adding a secondary listing in Ghana.

As part of the restructuring unveiled Friday, the miner said that it would be renamed AngloGold Ashanti PLC, as the UK office will ultimately hold all of the company’s operations outside of Africa. 

AngloGold sold its last mine in the home country in 2020, and has since shifted its focus to more lucrative mines in Ghana, Tanzania, the Democratic Republic of Congo as well as Australia and the Americas.

Chief executive Alberto Calderón said that having the primary listing in New York will place the company at the epicentre of the gold industry, making it easier to tap capital and narrow the discount its shares trade at when compared to larger rivals such as Newmont (NYSE: NEM; TSE: NGT) and Barrick Gold (TSX: ABX; NYSE: GOLD).

He added that two-thirds of the miner’s stock volumes were already being traded on Wall Street, where the company has listed depository receipts.

“This is not about South Africa,” Calderón said. “We are proud of our heritage.”

The move will also reduce risks associated with South Africa, where mining is becoming more costly and risky due to geological challenges posed by some the world’s deepest underground mines.

The current and previous CEOs have not been based in Johannesburg, with Calderón settled in Melbourne, Australia, and his predecessor, Kelvin Dushnisky, was based in Toronto, Canada.

AngloGold noted the shares represented by the CHESS depositary interests held on the Australian register had fallen to about 4.1% and represented less than 0.1% of the year-to-date average daily trading value of the company’s equity securities across all exchanges.

“We believe that the administrative and compliance obligations and costs associated with maintaining the ASX listing are no longer in the best interests of its shareholders as a whole,” the company said in the statement.

The exchange has approved AngloGold’s request to be delisted, which is expected to materialize on June 27, it said.

Market reaction

Analysts reacted cautiously to the announcements, with BMO Capital Markets highlighting the cost of the re-locating headquarters.

“Although we agree with management in terms of the historical valuation discount, in recent years we have seen the valuation gap significantly narrow,” BMO’s Raj Ray wrote in a note to clients.

“In our opinion, the significant upfront costs and lack of visibility around immediate material benefits could weigh on the stock,” Ray said. 

“With regard to indexation, it is yet unclear to us the potential impact due to inflows and outflows on the share price. It is our view that moving the primary listing to the US could result in AngloGold losing the emerging market gold story,” he noted.

RBC Capital Markets said the valuation upside forecast by the AngloGold’s management was “questionable,” while securing the backing of 75% of shareholders — about 40% being South African investors — was a “key hurdle” for the move.

Shares in the company were down 6.2% at $25 each in pre-market in New York, after having fallen more than 7% in Johannesburg near closing, exchanging hands at 47,649 ZAR each.

Ernest Oppenheimer founded Anglo American in 1917 and its subsequent development led the growth of the world’s largest gold industry for many years. 

The sector boosted South Africa’s coffers and made it the leading economy in Africa. 

Anglo began withdrawing from the home country in 1998, when it consolidated its gold subsidiaries into AngloGold Ltd. It expanded its international presence in 2004 with the acquisition of Ashanti Goldfields Ltd. of Ghana.

The South African gold industry, by contrast, has shrunk to less than a fifth of its peak size and its economic relevance has been declining with about 93,000 people currently working in the sector.