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Africa's biggest fund manager, the Public Investment Corporation (PIC), has increased its holding in Gold Fields by R14bn in a move that signals a vote of confidence in the gold producer that is in the early stages of future-proofing its business by boosting its production profile.
The move came as the gold price hit a record high, surpassing levels last seen during the early days of the Covid-19 pandemic, making Gold Fields and other gold stocks an attractive proposition.
The price of the metal was $2,050.04/oz by 7pm on Thursday, up 12% since the start of the year and 20% over the past six months.
The PIC, which manages R2.5-trillion in assets on behalf of mainly government employees and is the largest single investor on the JSE, lifted its stake to 15% from 10%, Gold Fields said in a regulatory filing on Thursday. Its shares jumped 7% to close at R323.13 on the JSE, giving Gold Fields a record market valuation of R288.7bn.
"We are obviously pleased with the PIC's increased shareholding, which we hope reflects confidence in our strong operational performance," spokesperson Sven Lunsche said.
"But there is also an element of rebalancing in this. Our market cap has risen by over 50% since the beginning of the year, which has raised our weighting in key JSE indices. The PIC's holdings would have been adjusted to reflect the different index weightings."
The failure of three US regional banks over the past two months has stoked market angst, boosting the price of gold, which has safe-haven characteristics. Market expectations that the US Federal Reserve will soon end its 14-month campaign to hike interest rates boosted the gold price as an asset class.
Higher interest rates tend to put pressure on gold because the latter is a non-interest-bearing asset.
As a consequence, Gold Fields' market value has risen
by R120bn as its shares leapt 80% in 2023.
Rivals AngloGold Ashanti and Harmony Gold surged 67% and 69%, respectively over the same period. DRDGold has nearly doubled while Pan African Resources was up 43%.
The news of the PIC's increased investment comes just days after Gold Fields announced it would spend at least R8bn to secure a 50% stake in the Windfall gold project in Canada in partnership with Osisko Mining.
The partnership with the Canadian miner marked an apparent shift in strategy for Gold Fields, which six months ago failed to acquire Yamana Gold in an all-share transaction that was valued at R120bn at one stage in 2022.
Its shareholders slammed the proposal at the time, arguing Gold Fields was overpaying for an asset with limited growth potential.
Gold Fields subsequently lost out after a joint rival bid by Pan American and Agnico Eagle in November, leading to the resignation of then CEO Chris Griffith a month later.
However, interim CEO Martin Preece said this week while mergers and acquisitions were likely to be part of Gold Fields' future growth, large transactions were unlikely options.
In mid-March, Gold Fields and rival AngloGold Ashanti announced the creation of Africa's largest gold mine in Ghana. The joint venture brought together Gold Fields' Tarkwa Mine and AngloGold Ashanti's Iduapriem Mine, both located near the town of Tarkwa in western Ghana.
In terms of the proposal tabled with the government of Ghana, Gold Fields will own 60% of the joint venture, AngloGold Ashanti 30% and the government 10%.
"The recently announced partnership with Osisko Mining and the joint venture with AngloGold Ashanti in Ghana demonstrates our commitment to growing the value and quality of our portfolio of assets," Preece said.
Gold Fields' portfolio spans Australia, Ghana, Latin America and in SA, it only owns South Deep after hiving off its local gold assets to Sibanye-Stillwater over the past decade.
In its quarterly production update on Thursday, Gold Fields kept its 2023 guidance unchanged at 2.25-million ounces to 2.30-million ounces, compared with the 2.32-million ounces achieved last year.
