Johannesburg, South Africa — 11 February 2013 – Shares of Sibanye Gold “’ the new company spun off from the world’s fourth-largest bullion producer, Gold Fields Limited “’ opened on the JSE today at R13.05, near the bottom end of market expectations.
Fin24 reports that analysts had expected the shares to trade anywhere from R8 to R52, so its debut will hardly inspire other major South African gold producers such as AngloGold Ashanti to follow suit.
Gold Fields shares fell nearly 12% to R94.00, a drop that roughly mirrored the value of the new entity.
Gold Fields is spinning off two of its three South African mines, both of which were hit by labour unrest last year. It is holding on to its South Deep mine, which has avoided recent labour conflict due to its high level of mechanisation.
By unloading the older assets, Gold Fields hopes to make itself more attractive to investors who are uncomfortable with the labour risk associated with South Africa. Other companies could eventually follow suit.
South Africa was pounded by waves of violent labour unrest last year that started in the platinum industry and spread into gold, diamonds and later trucking and agriculture.
More than 50 people were killed, hitting investor confidence and raising questions about President Jacob Zuma’s management of the continent’s biggest economy.
Source: Fin24. For more information, click here.