Teilübersetzung weiter unten.
Miner’s Glory Days Are Over
By Kathleen Body and Ian Spence
30 Mar 2005 at 07:09 AM EST
THE battle to determine the correct value of Harmony is a real one. At stake is the level playing field that Gold Fields shareholders need to ensure fair value in any deal with Harmony. For that to occur we need to see the real picture: take out the spin and propaganda against Gold Fields by Harmony — poor management and so on — which is all unsupported by today’s facts.
Rather, Harmony’s rationale for the merger in the offer document more appropriately applies to itself, as Harmony seems to have been losing control of its grades and working costs.
The main criterion for a comparative assessment is shareholder return on equity. On this basis, Gold Fields’ record is far superior to that of Harmony. More telling is the fact that Gold Fields is profitably expanding abroad, while Harmony must contract, with cost, just to survive as a marginal producer.
Gold Fields has been rapidly increasing its low-cost gold resources by prospecting and by acquisition abroad, where undeveloped gold-bearing ore bodies can be mined more cheaply than is possible in SA’s remaining deep-level ore bodies. Meanwhile, Harmony is a marginal, deep-level, high-cost miner — which now has to undergo a major 25%-50% contraction, with a 20% reduction of its workforce, over two years, at great cost, if it is to become manageable and profitable again. This is based on Harmony’s declared ore reserves and using realistic, required mining grades (with a higher pay limit than used in the orereserve calculations).
Much of Harmony’s gold resource material might have to wait two decades before the balance of cost advantage, now enjoyed by non-South African producers (or 86% of world production) begins to swing back to SA, along with a major price rise above present levels.
On discounted present-value analysis — taking account of a period of negative cash flows to cover short-term losses, paying off debt and the capital expenditure for reconstruction — Harmony’s present share price looks significantly overvalued. On the basis of the perceived risk of failure, the same could be true.
The recently announced plan to retrench 5000 Harmony workers, which was apparently begun in April last year, is a good start. Harmony will need to cut a further 5000 jobs over the following two years. To pay the required retrenchment compensation and the capital expenditure involved in the restructuring, Harmony would have to take on a lot more debt (or go for a new capitalisation issue and dilute its shares further).
The present profit producers are Target (a new mine), two or three shafts in Free State, the Cooke shaft on the West Rand, and Evander, which has uncertain prospects. (Harmony’s Australian mine is comparatively insignificant). Shareholders must wait to see reasonable returns while the money-losers are closed.
Harmony is a victim of apartheid’s management of foreign exchange, whereby government was able to maintain a high rand-dollar value with negative net reserves by running an aggressive forward currency book. This was a very expensive strategy used by former Reserve Bank governor Chris Stals to defend the rand during the 1997-98 southeast Asian economic crisis.
A few years ago, after the Economist, in a comparative study of undercovered currencies, rated the rand among the most at risk of forced devaluation, such a devaluation did occur. Foreign investors lost faith in the rand and Tito Mboweni, who took over from Stals, let the rand find its own level.
For the year to October 2002, the exchange rate averaged just below R11 to the dollar. Those were glorious, high-profit days for Harmony.
As an end-of-mine-life specialist, with a credible record of being able to cut costs and restructure (using a higher ratio of geologists to mining engineers), Harmony bought up “cheaply” most of the old mines (largely low grade).
The two major mining groups had started to move offshore where there was much greater undeveloped gold-mining potential. Harmony also went abroad to buy mines in Russia, Canada and Australia. In its acquisition spree, Harmony used its then high market-valued paper and debt to buy much of this growth. It is very possible that Harmony took on more than it could handle.
The glory days came to an end when Finance Minister Trevor Manuel and the treasury were able to stop government’s tendency towards excessive budget deficits and managed to pay off the forward currency debt. The dollar is now in structural decline, and the rand has nearly doubled its dollar worth and is structurally strong. This makes Harmony’s South African operations as marginal as before.
Lacking financial strength, Harmony has been forced to sell some of its foreign acquisitions at nonoptimal prices. It now must find a lot more new capital just to restructure itself and survive.
- Body is an independent precious metals analyst and Spence is an economist.
http://www.resourceinvestor.com/pebble.asp?relid=8889
>Um das wirkliche Bild zu sehen, muß man Harmony´s Propaganda gegen Gold Fields herausnehmen– armseliges Management und so weiter- was alles durch die heutigen Fakten gar nicht gedeckt ist. [Blockierte Grafik: http://download.smiliemania.de/smilies132/00000285.gif]
Mehr noch, Harmonys Begründung für die Übernahme trifft auf Harmony selbst zu, da Harmony anscheinend die Kontrolle über die Grade und Arbeitskosten verloren hat. [Blockierte Grafik: http://www.mainzelahr.de/smile/froehlich/lachen.gif]
Das Hauptkriterium für einen Vergleich ist die Eigenkapitalrendite. Auf dieser Basis ist GFI weit überlegen. Noch aussagekräftiger ist, daß GFI profitabel im Ausland expandiert, während HAR kontrahieren muß, nur um als Grenzproduzent überleben zu können.
GFI hat schnell seine niedrigkostenden Goldressourcen im Ausland erweitert. Währenddessen ist HAR ein Grenzminer mit kostenintensiven Tiefminen, die nun um 25-50% abgebaut werden müssen, mit einer 20% Reduktion der Belegschaft innerhalb zweier Jahre bei großen Kosten, wenn es wieder profitabel werden will.
Bei einer diskontierten Barwertanalyse, die die Zeiträume mit negativem Kassenzufluß für kurzfristige Verluste, Schuldentilgung und Kapitalkosten für Rekonstruktionen berücksichtigt, erscheint Harmonys gegenwärtiger Aktienpreis signifikant überbewertet. [Blockierte Grafik: http://www.mainzelahr.de/smile/froehlich/lachen.gif]
Der kürzliche angekündigte Plan, 5000 Arbeiter abzubauen, ist ein guter Beginn. Harmony muß weitere 5000 Jobs in den folgenden zwei Jahren abbauen. [Blockierte Grafik: http://download.smiliemania.de/smilies132/00000116.gif] Für den Schrumpfungsprozeß muß HAR eine Menge mehr Schulden machen oder eine Kapitalerhöhung mit Aktienverwässerung durchführen.
Im Jahr 2002 war der Randkurs 11R zum Dollar. Dies waren die glorreichen, hochprofitabeln Tage von Harmony.
Als ein Spezialist für Gruben am Ende ihrer Lebensdauer, mit einer Erfolgsstory von Kostensenkungen und Restrukturierungen, kaufte HAR „billig“ die meisten der alten Gruben (hauptsächlich niedriggradige).
HAR kaufte auch Gruben in Rußland, kanada und Australien mit der damals hochbewerteten Aktie und Schulden. Möglich, daß Harmony mehr auf sich nahm, als es verkraften konnte.
Die glorreichen Tage waren vorbei, als die exzessiven staatlichen Budgetdefizite gestoppt wurden. Der Rand hat sich beinahe verdoppelt und ist strukturell stark. Dies macht Harmonys Südafrikaoperationen marginal wie zuvor.
Durch die fehlende finanzielle Stärke war Harmony gezwungen, einige der ausländischen Akquisitionen zu ungünstigen Preisen zu verkaufen. Nun muß es eine Menge mehr neues Kapital finden, nur um sich selbst zu restrukturieren und zu überleben. <
[Blockierte Grafik: http://www.mainzelahr.de/smile/geschockt/augen58.gif]
