· With the soaring gold prices, cash flow and profits of mining companies of South Africa have improved strongly.
· Apart from gold, the prices of platinum group metals (PGMs), particularly palladium and rhodium, also strengthened significantly since the second half of last year.
With the soaring gold prices, cash flow and profits of mining companies of South Africa have improved strongly. Apart from gold, the prices of platinum group metals (PGMs), particularly palladium and rhodium, also strengthened significantly since the second half of last year. The strong gold price enabled mining companies to reward shareholders with bumper dividends and also improved their balance sheets. It also reflected in a better rating. S&P Global Ratings gave a positive outlook for companies such as Sibanye-Stillwater, AngloGold Ashanti and Gold Fields. It is expected that these companies will be able to pay back debts faster than expected. The spurt in prices also led to investors dumping risky assets for gold which is considered a safe asset during times of uncertainty.
However, the PwC Mine report released earlier this year pointed out that despite the strong prices, deal activity fell 33 percent in the first four months of the year compared to last year. The miners seem to be avoiding the pitfalls of pursuing large cash and debt-backed deals in a rising price environment. According to the World Platinum Investment Council (WPIC) latest report, the platinum deficit this year would be just more than 1.2 million ounces, and 224 000 ounces next year, mainly due to supply disruptions in South Africa. Experts point out that the demand for PGMS is likely to be driven by the rate of global economic recovery, auto-demand and emissions regulations.
